Corporate Green Innovation Research Articles

Supply chain digitalization and firms' green innovation: Evidence from a pilot program

Green innovation is essential for realizing environmental sustainability and achieving long-term ecological balance. This paper investigates the influence of supply chain digitalization on firms' green innovation in the manufacturing industry. China's 2018 Supply Chain Innovation and Application Pilot program as a quasi-natural experiment, we employ a difference-in-differences (DID) estimation approach to reach the following findings: (1) supply chain digitalization significantly enhances the quantity and quality of enterprise green innovation, with a more substantial impact on quality. (2) supply chain financing capacity and firm environmental awareness play a partial mediating role in the relationship supply chain digitalization and the quality and quantity of corporate green innovation. (3) the heterogeneity analysis reveals that the impact of supply chain digitalization on green innovation is notably heightened in firms with managers who have overseas experience, weak internal controls, and poor regional supply chain environments. This study enriches the theoretical understanding of enterprise green innovation from the perspective of supply chain digitalization, providing a theoretical basis and practical insights for green innovation practices in enterprises.

The Impact of ESG Rating Events on Corporate Green Technology Innovation under Sustainable Development: Perspectives Based on Informal Environmental Regulation of Social Systems

Corporate green technology innovation is an important driver to promote the green transformation of the manufacturing industry 4.0 and an important engine to achieve China’s carbon peak, carbon neutrality, and high-quality economic development. Based on the theory of informal environmental regulation of social systems, this study empirically analyzes the impact of ESG rating events on corporate green technology innovation by constructing a multi-period DID model using panel data of Chinese listed companies from 2010 to 2022 as the research sample. The findings suggest that ESG rating events and ESG scores can stimulate corporate green technology innovation. ESG rating uncertainty can inhibit corporate green technology innovation. The mediation effect analysis shows that ESG rating events can stimulate firms’ green technology innovation by reducing financing constraints, increasing the degree of corporate internal control, and increasing R&D investment. In addition, heterogeneity analyses indicate that ESG rating events have a better stimulating effect on the quantity of innovation of non-state-owned enterprises than state-owned enterprises, while the stimulating effect on the quality of innovation of non-state-owned enterprises is inferior to that of state-owned enterprises. Moreover, the innovation stimulation effect of ESG rating events shows a trend of east-high and west-low in geographical distribution. Therefore, the government should accelerate the construction of the ESG rating system, promote the degree of convergence with international standards, and improve the level of enterprises’ utilization of digital technology while paying attention to informal environmental regulation.

Natural disaster and corporate green innovation: Evidence from earthquakes

This paper investigates whether the occurrence of earthquakes affects firms' green innovation. Using Chinese non-financial listed companies from 2006 to 2020, we find that the occurrence of earthquake has a significant negative effect on corporate green innovation. This finding holds after a series tests to deal with possible endogeneity issues. We further verify that earthquakes inhibit firms' green innovation by reducing firms' sales revenue and increasing firms' agency costs. Heterogeneity analysis further demonstrates that earthquakes have a greater impact on firms with high innovation investment, lower analysts' attention, and those located in more economically developed regions. Overall, our findings suggest that earthquakes influence the behavior of market participants and the economic decisions of firms.

The impact of green public procurement on corporate green innovation: evidence from machine learning and text analysis

Based on a database of over 650,000 green public procurement (GPP) contracts, we apply machine learning and text analysis methods to identify GPP. Our study examines the impact of GPP on green innovation using Chinese companies listed on the A-share market. The study has the following findings. (1) GPP significantly promotes green innovation by alleviating financing constraints and incentivizing green practices. (2) Enterprises in the maturity or growth stage, non-heavily polluting firms, and companies in regions with stringent environmental regulations are more likely to benefit from GPP. Additionally, GPP initiatives from local governments, centralized procurement, and university-based programs provide stronger incentives for green innovation. (3) Demand-side GPP and supply-side subsidies for green innovation have coordination effects. Corporate green innovation is positively influenced by the “Demand-side procurement First, Supply-side subsidies Later (DFSL)” and the “Demand-side procurement and Supply-side subsidies Simultaneously (DSS)” policies.

Institutional investor cross-ownership networks and green innovation: Evidence from China

This paper examines the effect of network centrality, a measure of the extent and strength of a firm's connections formed by institutional investor cross-ownership (IICO), on corporate green innovation. Using a sample of Chinese-listed firms between 2003 and 2019, we demonstrate that corporate green innovation is positively correlated with the network centrality of IICO. This finding is more pronounced for firms that have low R&D investment and for non-state-owned firms than for other firms. Regarding the influence mechanisms, we find that network centrality promotes green innovation by enabling information transmission, alleviating managers' career concerns, and enhancing external monitoring. Further analyses suggest that network centrality affects both the quantity and the quality of corporate green innovation. Our paper provides insight into how to promote green innovation and accelerate the transformation of firms toward sustainable practices.

Does corporate green innovation unlock financial doors? The mediating role of environmental performance

Purpose This study aims to respond to the latest research calls to precisely revisit the nexus between corporate green innovation (CGI) and financial decisions through deeply investigating the mediating effect of corporate environmental performance measured by the effectiveness of emission reduction. Design/methodology/approach This study analyzes nonfinancial-listed firms on the Australian Securities Exchange from 2002 to 2019 using multiple regression analysis on a panel data set. Initially, different static panel data approaches were used. To account for the potential endogeneity issue and generate robust outcomes, the authors apply the one-step system generalized method of moment, two-stage least squares and lagged model approaches. Findings The results provide a clear indication that the practices of green innovation can favorably contribute to the level of environmental performance, which in turn affect the firm’s ability in opening the new financial doors and shape solid capital structure. In this context, the effective environmental performance fully mediates the nexus between CGI and capital structure of a firm. More importantly, the outcomes are robust and coherent across different estimation techniques. Originality/value The originality of this study lies in its utilization of mediation analysis to explore the relationship between CGI and a firm's financial structure. This approach distinguishes it from previous research by offering a thorough and nuanced understanding of how green innovation practices influence the financing decisions of a firm.

THE IMPACT OF DIGITAL TRANSFORMATION ON GREEN INNOVATION IN MANUFACTURING ENTERPRISES

This study aims to investigate how digital transformation affects green innovation in manufacturing enterprises. As a result, this article used data from Chinese A-share manufacturing listed companies from 2012 to 2022 as a research sample and conducted empirical testing using a fixed effects model. Research has found that digital transformation has a positive promotion effect on both the quality and efficiency of green innovation in enterprises. The key path for enterprises to achieve green innovation and improve quality and efficiency is through the "bridge" role of risk-taking ability: digital transformation helps businesses obtain more funds and information resources, reduce agency costs, alleviate financing constraints, and thus improve risk-taking ability. Improving risk-taking ability can stimulate enterprises' willingness to invest in innovation activities, accelerate the research and development process, and promote green innovation in enterprises. This article enriches the research on the relationship between digital transformation and corporate green innovation, providing a theoretical basis for how digital transformation can better support the "quality and efficiency improvement" of corporate green innovation.

The Functional Mechanisms through Which Artificial Intelligence Influences the Innovation of Green Processes of Enterprises

Green process innovation is an important strategy in the high-quality development of enterprises. Digital technology is becoming a key factor in helping businesses address environmental issues and contributes to their green process innovation and sustainable growth. Nevertheless, there is a lack of studies on how particular digital technology categories affect corporate green process innovation. Artificial intelligence (AI) is an important part of digitalization as it can provide new technical means and guidance for enterprise’s innovation of green processes. This study aims to fills this research gap by revealing the logical relationship between digital technology and the green development of enterprises. Using China’s A-share-listed companies as the research object from 2013 to 2022, this study employed a two-way fixed-effects model and investigated the impact of artificial intelligence (AI) on corporate green process innovation and the moderating effect of multidimensional intellectual capital. The results revealed that AI positively impacts corporate green process innovation. Human capital, structural capital, employed capital, and relational capital strengthen this positive effect. Robustness tests validated these conclusions. This study expands the literature on digital technology and corporate green innovation and provides a reference for enterprises to implement green practices using digital technology.

How does venture capital play a role in corporate green innovation? Evidence from China

This research underscores the critical role of green innovation in advancing corporate sustainability and green transformation. Analyzing 9048 panel data points from China between 2010 and 2021, we applied a series of fixed effect models to assess how venture capital (VC) influences corporate green innovation. The study examined the effect of VC on two key business aspects: the costs of debt financing and the propensity for corporate risk-taking. The findings confirm that venture capital is essential in promoting corporate green innovation by lowering debt-related financial burdens and diminishing firms' inclination to take risks. Additionally, our heterogeneity analysis indicates that venture capital's impact is more pronounced within eastern China and among state-owned enterprises, suggesting regional and ownership-based variations in green innovation dynamics.

Sustainable Institutional Investors and Green Innovation: Evidence from Chinese Listed Firms

ABSTRACT This study examines the impact of sustainable institutional investors’ participation in the green innovation activities of firms. We hypothesize that institutional investors with sustainable preferences integrate long-term environmental goals into their investment strategies, consequently enhancing green innovation outputs. Using a dataset of Chinese A-share listed firms, we find a significant positive relationship between the presence of sustainable institutional investors and corporate green innovation outputs. Further analysis reveals that these investors promote the disclosure of environmental information and improve firms’ ESG performance, thereby providing financial support for green innovation initiatives. Our findings demonstrate that sustainable institutional investors “walk the talk” by fostering green innovation.

Carbon emission right circulation and corporate green innovation: Evidence from a quasi-natural experiment in China

This paper studies how carbon emissions right circulation affects corporate green innovation performance. Using the carbon emissions trading policy in China as a quasi-natural experiment, we find that carbon emission right circulation has a significant positive impact on corporate green innovation performance. This finding is robust to various checks, including the parallel trend analysis, placebo test, the instrumental variable approach, and alternative measures of green innovation. Mechanism tests show that the carbon emission right circulation policy promotes corporate green innovation performance by reducing environmental uncertainty, alleviating financing constraints, and improving external monitoring. In addition, cross-sectional analyses reveal that the positive impact of carbon emission right circulation on corporate green innovation is more significant in firms without political connections and lower levels of capacity utilization.

Impact of media attention on corporate green innovation: What is the role of dual environmental regulation?

This study explores the intricate interplay between media attention, dual environmental regulation, and corporate green innovation quality using a comprehensive dataset of Chinese A-share listed companies. Thus, our rigorous empirical analysis reveals that media visibility significantly affects corporate environmental sustainability efforts, with formal and informal environmental regulations moderating its impact. Media attention acts as a powerful catalyst for green innovation during growth and mature stages of a company's lifecycle; however, its effect diminishes during recessions. We determine significant heterogeneity across industry types and ownership structures. Non-high-polluting industries and non-state-owned enterprises show stronger positive responses to media scrutiny in their green innovation efforts than high-polluting sectors and state-owned enterprises. Furthermore, formal environmental regulations amplify the positive effect of media attention on green innovation, suggesting a synergistic potential that encourages companies to exceed baseline environmental standards. In contrast, while having no direct impact on green innovation, informal environmental regulation significantly moderates the relationship between media attention and innovation quality. These findings add to the literature on environmental innovation by demonstrating the conditional effectiveness of media attention and the critical role of regulatory frameworks in fostering sustainable corporate practices across industries and ownership contexts, with implications for policymakers, corporate strategists, and environmental advocates.

Enhancing corporate carbon performance through green innovation and digital transformation: Evidence from China

This paper discusses the theoretical issues related to the mechanisms through which low-carbon technological innovation and digital transformation affect corporate carbon performance in the context of green and low-carbon transformation. Taking China as a case, this research selects listed manufacturing companies from 2013 to 2020 as the sample to explore the impact of green innovation on corporate carbon performance. The study finds that corporate green innovation effectively promotes the improvement of corporate carbon performance, and digital transformation positively moderates the relationship between green innovation and corporate carbon performance. Further analysis reveals that further enhances corporate carbon performance by improving environmental information disclosure and easing financing constraints.

Does Environmental, Social, and Governance Performance Affect Corporate Green Innovation? Evidence from China

Does Environmental, Social, and Governance Performance Affect Corporate Green Innovation? Evidence from China

The impact of intelligent investment on corporate green innovation: Moderating effects of executive green perception and environmental regulation

As firms increasingly invest in intelligent technologies while facing environmental pressures, it is crucial to understand the relationship between these investments and green innovation. This study aims to investigate how intelligent investment influences corporate green innovation, as well as the moderating roles of executive green perception and environmental regulation. Multiple regression analyses are employed to test our hypotheses through the use of panel data from Chinese A-share listed companies (2007–2022). According to the research findings, intelligent investment has a significant positive impact on green innovation, and this effect is further amplified by stronger executive green perception and more stringent environmental regulations. It is noteworthy that various types of firms are affected differently by this effect. State-owned enterprises and pollution-intensive industries exhibit stronger positive relationships, while non-high-tech sectors show more pronounced impacts. These findings enhance our understanding of how firms leverage technology to drive sustainable innovation, offering valuable insights for managers seeking to align tech investments with their goals of sustainability, and for legislators and administrators designing effective environmental regulations. It is recommended that policymakers take into account the establishment of regulatory frameworks that are conducive to intelligent investments, thereby fostering green innovation across various industries.

Government R&D Subsidies, Environmental regulation and corporate green innovation performance

Through empirical analysis, this study proves that government R&D subsidies play a positive role in promoting enterprises' green innovation activities, and the strengthening of environmental regulation further amplifies this impact. Meanwhile, financing constraints and financing costs, acting as mediating variables, reveal the pathway by which government subsidies indirectly promote green innovation by improving the corporate financing environment. The research provides a basis for the government to formulate fiscal support policies to promote corporate green innovation.

The importance of green patents for CDS pricing: The role of environmental disclosures

Corporate green innovation to address global climate change has potential spillover effects through positive financial outcomes. This study examines how the credit market takes green innovation, measured by the approval of green patents, into account to determine the credit default swap (CDS) premia. Using a sample of United States (US) firms from 2002 to 2020, this research finds that the CDS market favourably prices green innovation: firms with more green patents have lower CDS spread, suggesting that the CDS market considers firms' green innovation in their investment decision. While greater firm-provided environmental disclosures boost the effect of green innovation, involuntary environmental exposures by external channels such as print and online media offset the favourable effect of green innovation on CDS spread. The green technology pilot program by the US Patent and Trademark Office in 2009 is exploited as a quasi-natural experimental setting to apply a difference-in-differences analysis, confirming the favourable effect of green innovation on CDS spread. The results remain robust to various sensitivity and other endogeneity tests. Managers intending to reconcile green innovation with their stakeholder value maximisation objective may find the findings interesting.

Effects of public procurement on corporate total-factor carbon productivity: evidence from China

Using balanced panel data for listed Chinese industrial firms from 2016 to 2021, this study examines the effect of public procurement (PP) on corporate total-factor carbon productivity (CTFCP) and the related mechanisms. The results show that (1) there is a positive correlation between PP and CTFCP. (2) PP exerts a more pronounced incentivizing effect on CTFCP for state-owned enterprises, larger corporations, and those with weaker financing constraints. (3) We decompose CTFCP into technological progress (TECH), pure technical efficiency (PTE), and scale efficiency (SE) and find that PP improves TECH and PTE, and the effect differs according to firm ownership, scale, and financing constraints. (4) PP promotes CTFCP through labor productivity (LP), capital productivity (CP), and corporate green innovation (CGI) while the mediating role of environmental productivity (EP) is not significant. This study contributes to theoretical discourse on PP’s influence on CTFCP and has practical implications for PP agencies and enterprises.

Environmental performance shortfalls and corporate green innovation: The role of green credit regulation

This paper investigates the effects of environmental performance shortfalls on corporate green innovation. On the basis of the theoretical framework of environmental performance feedback and using a sample of eight major energy-consuming industries in China, a negative relationship is confirmed that environmental performance below but in the neighborhood of peer level makes firms more inclined to pursue green innovation. Higher risk-taking willingness for firms with environmental performance below but close to peer level strengthens innovative intention. This correlation is pronounced when corporate financial performance, green innovation performance, and executive compensation are below peer level. We also find that green credit constrained firms prefer to engage in innovation activities when their environmental performance is below but near peer level and they have fewer bank loans simultaneously. The findings offer insights into the innovation behavior of firms in response to environmental underperformance.

Effect of media attention on corporate green technology innovation: mechanism and evidence from China

Effect of media attention on corporate green technology innovation: mechanism and evidence from China