Can vertical environmental regulation induce enterprise green innovation? A new perspective from automatic air quality monitoring station in China

Greening through top management team's environmental attention?

Green innovation seamlessly merges the concepts of "innovation-driven" and "green development," constituting a potent mechanism for firms to promote sustainable development. This study employs micro-level data sourced from China's A-share listed companies, drawing on the attention-based view and upper echelons theory as theoretical foundations. Utilizing text analysis, we quantify top management team's (TMT) environmental attention, subsequently employing a two-way fixed-effects model to investigate the correlation between TMT's environmental attention and firm's green innovation. Proceeding judiciously in light of extant evidence, we tentatively derive the subsequent conclusions: (1) TMT's environmental attention can drive firm's green innovation. This viewpoint still holds after multiple robustness tests such as Heckman model and placebo test. (2) Executive environmental background positively moderates the influence of TMT's environmental attention on firm's green innovation. (3) Information asymmetry between the government and firms could potentially exist, as the effect of TMT's environmental attention on firm's green innovation is not significant for firms with more government subsidies. (4) CEO duality attenuates the favorable influence of TMT's environmental attention. This research unveils internal driving factors for firm's green innovation, thereby furnishing a reliable basis for firms to develop more effective sustainable development strategies.

Central vertical regulation and urban environment-biased technological progress: evidence from China

Technological progress in favor of cleaner production is the key to achieving low-carbon development in China. The Ambient Air Quality Standard (AAQS) issued by the Ministry of Environmental Protection (MEP) in 2012 was an essential policy for the central government to implement vertical environmental regulation. Therefore, based on the city-level panel data, this paper examines the impact of the central vertical regulation on urban environment-biased technological progress using the difference-in-differences method. The results show that central vertical regulation can significantly promote urban environment-friendly technological progress. Heterogeneity analysis shows that the driving effect of the central vertical regulation on urban environment-friendly technological progress is more obvious in the eastern regions, non-resource-based cities, large cities, and high-grade cities. Moreover, the channel analysis shows that the central vertical regulation mainly boosts the urban environmental technology progress toward cleaner production by strengthening government environmental governance, raising public environmental concern, and improving energy structure. The findings provide policy implications for evaluating the effectiveness of macro-environmental policy and promoting green sustainable development.

National innovative city and green technology progress: empirical evidence from China

In this paper, a quasi-natural experiment of national innovative city pilot policy (NICPP) is carried out to investigate the impact of the NICPP on green technology innovation (GTI) and its intrinsic mechanism with the method of difference-in-differences. It is found that the NICPP significantly enhances GTI, and there is a certain lag and persistence in this effect. Heterogeneity analysis shows that the higher the administrative level and the more the geographical advantages of NICPP, the more obvious the driving effect of GTI. The mechanism test shows that the NICPP has an effect on the GTI through three channels: innovation factor input, agglomeration effect of science and technology talent, and entrepreneurial vitality empowerment. The findings of this study provide policy insights for further optimizing the construction of innovative cities and then promoting GTI development, ultimately realizing green dynamics transformation and high-quality development of China's economy.

Advancing nuanced pollution control: Local improvements and spatial spillovers of policies on key enterprises

This paper examines the impact of air pollution control policies targeting key polluting enterprises, highlighting a strategic shift towards precision pollution control that concentrates on high-emission, high-risk businesses. The paper explores the efficacy of these policies and their potential spatial spillover effects, utilizing panel data from 259 Chinese cities from 2013 to 2021. Employing the difference-in-differences (DID) model and spatial Durbin model, the study analyzes both the direct local effects and the broader spatial consequences of these regulatory measures on air quality. The findings indicate a significant reduction in air pollutant concentrations in urban areas, attributing this improvement to factors such as industrial restructuring, increased investment in science and technology, and economic growth. Spatial econometric analysis further reveals a substantial positive correlation in air quality among Chinese cities. However, estimates of the spillover effect indicate that while such policies successfully reduce pollution locally, they could unintentionally degrade air quality in adjacent areas. The study highlights the need for nuanced policy strategies to mitigate unintended spatial spillovers and enhance overall effectiveness. It recommends tailored policies that integrate environmental and socioeconomic objectives, national and regional coordination for consistent enforcement, technology-driven compliance strategies, and incentives for sustainable enterprise practices.

The relationship between dynamic monitoring network plans and eco-efficiency - New evidence from atmospheric quality monitoring policy in China

China's rapid economic development in recent decades has come at a considerable environmental cost. This paper explores whether atmospheric quality monitoring policy (AQMP) improves eco-efficiency by using AQMP as a natural experimental group. We assessed the eco-efficiency of 285 cities in China from 2009 to 2019 using the super-efficient SBM model and estimated the impact of AQMP using the propensity score method Difference-in-Difference (PSM-DID) model. The key findings of this paper are as follows: First, AQMP can enhance eco-efficiency, promoting sustainable urban development. Second, governmental and non-governmental organizations play contrasting roles in either fostering or reversing the positive effects of AQMP. Factors like innovation, clean energy adoption, and industrial structure have a positive mediating influence. Finally, the impact of AQMP on eco-efficiency varies across cities, displaying heterogeneity. Specifically, AQMP has a positive effect on eco-efficiency in resource-rich cities, small and medium-sized urban centers, smart cities, and coastal areas. These findings carry significant implications for the establishment of dynamic monitoring networks and the advancement of eco-efficiency in emerging countries, including China.

The road to green innovation in agriculture: the impact of green agriculture demonstration zone on corporate green innovation

Agricultural green transformation is crucial for addressing environmental issues like pollution and soil degradation. However, limited attention has been given to its determinants in the existing literature. This study extends the "Porter hypothesis" in agricultural economics and discusses the institutional factors influencing green transformation in Chinese agricultural enterprises from the perspective of environmental regulations. Using data from 2007 to 2020, we examine the impact of the green agriculture demonstration zone (GADZ) policy on green innovation in Chinese A-share listed agribusinesses. The results show that the policy significantly improves green innovation, leading to a 9.9% increase in patent applications. We also find that the GADZ promotes green innovation in agricultural businesses through two economic mechanisms, reducing financial risks and enhancing media attention. In addition, the policy's effect is influenced by property rights, information disclosure quality, and financial resources. Our findings offer valuable insights for promoting green innovation and high-quality agricultural development in emerging economies.

Symbol or substance? Environmental regulations and corporate environmental actions decoupling

Our paper focuses on how firms strategically respond to environmental regulations on environmental actions. Given the greater discretion in environmental information disclosure and relaxed environmental regulations enforcement in China, we propose that firms tend to say more while do less to obtain environmental legitimacy, namely corporate environmental actions decoupling. Using a sample of 5422 Chinese firm-year observations over the period of 2012-2018, we document that stringent environmental regulations contribute to a significant inconsistency between environmental reporting and actual environmental performance. Moreover, we demonstrate that this inconsistency is exacerbated when firms possess greater bargaining power and fewer financial resources. Our paper not only advances the understanding of how firms navigate external regulations by examining the tradeoffs between symbolic and substantive actions, but also sheds light on factors influencing decoupling/greenwashing practices from the perspective of government-business relations in China, and potentially in other emerging economies.

The ambient air quality standards, green innovation, and urban air quality: evidence from China

As China's economy transitions, environmental issues have become a major concern. This study examines the impact of Ambient Air Quality Standards (AAQS) on urban air quality using panel data from 284 cities in China from 2006 to 2019. The study utilizes DID (Difference-in-Difference) models to analyze the regulatory effects of AAQS and its spatial spillover. Additionally, the serial multiple mediation models are constructed to investigate the role of green innovation. The findings reveal that the AAQS positively affects urban air quality, albeit with a notable "hysteresis effect." Local implementation of AAQS worsens air quality in neighboring cities within a distance of 400 km, but beyond 400 km, the effect is reversed. Heterogeneity analysis shows that AAQS improves air quality in central cities, large-sized and medium-sized cities, cities with weak environmental governance, and resource-based cities. Mechanism tests suggest that AAQS may enhance urban air quality by promoting green innovation and optimizing industrial structure. Especially, either the energy-use effect or industrial-structure effect triggered by green innovation can contribute to the improvement of urban air quality.

Can regional joint prevention and control of atmospheric reduce border pollution? Evidence from China's 12th Five-Year Plan on air pollution

Border pollution is usually a difficult problem in environmental governance. Based on the data at the county level in China from 2005 to 2019, this study takes the 12th Five-Year Plan (FYP) for atmospheric pollution as a policy shock, and uses the difference-in-differences (DID) method to explore the impact of regional joint prevention and control (JPC) of atmospheric pollution policy on air pollution of the border regions. Empirical results show that: (1) After implementing the JPC of atmospheric pollution policy, the PM_2.5 concentration in the border regions is reduced by 3.5%. (2) The mechanism analysis shows that there is a spillover effect in the governing behaviors of local governments. In the border areas under low economic growth pressure and high environmental protection pressure, the reduction effect of the JPC of atmospheric pollution policy is more significant on the PM_2.5 concentration of the border regions. The research conclusions have new insights into the role and effect of macro-regional environmental JPC policy and border pollution control, and provide practical guidance for social green governance.

Influences of the ongoing digital transformation of the Chinese Economy on innovation of sustainable green technologies

Green technology innovation (GI) is a key factor in reconciling environmental protection with sustainable economic development. Routinely, GI in private companies have been delayed due to suspicious of pitfalls investments, which result in low return rates. Nevertheless, the digital transformation of Nations' Economies (DE) might be sustainably sound in terms of natural resources demands and environmental pollution. Energy Conservation and Environmental Protection Enterprises (ECEPEs) database was analyzed from 2011 to 2019 at the municipality level to measure the effect and influence of DE on GI in Chinese ECEPEs. The results suggest that DE has a significant positive influence on GI of ECEPEs. Moreover, the influencing mechanism statistical tests reveal that DE can promote GI of ECEPEs by improving internal controls and financing opportunities. Heterogeneous statistical analysis, however, indicates that the promotion of DE on GI might be constrained over the country. In general, DE can promote both high- and low-quality GI but preferably the latter.

Research on the influencing factors and formation mechanism of enterprises’ technological innovation failure based on grounded theory

The success of technological innovation is related to the future and destiny of enterprises, but because of its uncertainty and high risk, the risk of failure of technological innovation exists objectively. This paper uses grounded theory to code the typical cases of technological innovation failure at home and abroad and explores the causes of technological innovation failure. It is found that policies and regulations, institutional environment, and market environment are the important external factors that cause the failure of enterprise technological innovation, while the defects of enterprise technological innovation products, enterprise system, internal management, technological resources, and managers are the important internal factors that cause the failure of enterprise technological innovation. By constructing the evolution model of enterprise technological innovation failure, it is found that the failure of enterprise technological innovation is the result of the joint action of enterprise management operation mechanism, technology, capital, and other restraint mechanisms, as well as market and policy system guidance mechanism.

Achieving carbon neutrality: How does the construction of national high-tech zones affect the green innovation of enterprises? Based on quasi-natural experiments in pilot areas in China

From the standpoint of green patents, verifying the influence of the construction of national high-tech zones on the degree of green innovation of enterprises is of enormous theoretical and practical importance. We construct a multi-period two-difference model to assess the influence of the national high-tech zone policy’s implementation on enterprises’ levels of green innovation. The outcomes of the study show that: first, the establishment of national high-tech zones greatly increases the level of green innovation among enterprises. While the effect on green and practical patents is average, the effect on green invention patents is more obvious. Second, how enterprises in national high-tech zones promote green innovation varies significantly. Promotional effects are more prominent in Tier 1 and Tier 2 regions, non-state firms, and high-tech industries with significant economic development. State-owned enterprises, non-high-tech industries, and third-tier and lower-tier regions, on the other hand, fared brilliantly. Third, additional action mechanisms show that the establishment of national high-tech zones can contribute to the institutional environmental effects of enterprises and the concentration of green innovation elements, thereby realizing regional green innovation development. Thus, our research provides an empirical foundation for stimulating the formation of national high-tech zones, increasing firms’ ability to innovate on their own, and nurturing the long-term growth of national high-tech zones and associated businesses.

Environmental regulation, foreign investment, and green innovation: a case study from China

Green innovation (GI) has the dual attributes of green development and being innovation driven, and it has become an inevitable choice for solving the prisoner's dilemma of environmental protection and economic development under the action of the concept of sustainable development in the new era. This paper aims to clarify how environmental regulation (ER) can achieve a win‒win situation of GI and environmental protection by using data from prefecture-level cities in China and creating a dynamic panel model, quantile model, spatial econometric model, and panel threshold model to empirically analyze the dynamic effect and spatial effect of ER on GI as well as the nonlinear characteristics of the relationship between them and to examine the moderating effect of foreign direct investment (FDI). The results show that ER significantly promotes the development of the GI level and that FDI can play a positive moderating role. The impact has regional heterogeneity, time period heterogeneity, and resource endowment heterogeneity. After several robustness tests, the empirical conclusions are still credible. Based on the empirical conclusions, this paper makes policy suggestions on ER, foreign investment introduction, and the coordinated development of regional GI.

Environmental regulation and green innovation of polluting firms in China

The main objective of this paper is to study the impact of the Ambient Air Quality Standard (2012) on the green innovation of Chinese firms in polluting industries. The analysis features "leverage effect" of Porter Hypothesis imposed by environmental regulations and exploits exogenous variations caused by the promulgation of the new policy. Based on the exogenous variations, this paper uses the time varying PSM-DID method. The findings of this study suggest that the implementation of the new policy improves firms' green innovation. Increments in R&D investment and environmental protection investment are channels through which the new standard positively affects firms' green innovation. The cross-sectional heterogeneity analysis exhibits that the effect of this environmental regulation is stronger for firms with bigger size and lower financial constraints. The contribution and significance of this study are as follows: our study enriches understanding of the impact of environmental regulation on firms' green innovation by empirically confirming the influencing channels of the impact of environmental regulations on green innovation. In addition, this paper contributes to the firms' green innovation literature by empirically validating the role of corporate characteristics in moderating the effect of environmental regulations.

How does digital technology promote carbon emission reduction? Empirical evidence based on e-commerce pilot city policy in China

Digital technology is an effective way to realize the carbon neutrality target in China. Therefore, based on panel data at the city level in China from 2006 to 2016, we take the e-commerce pilot policy as a quasi-natural experiment, using the staggered difference-in-differences (DID) method to explore the effect of digital technology development on carbon emissions and its transmission mechanism. The conclusion of this paper shows that (ⅰ) the e-commerce pilot policy has significantly reduced carbon emissions. After a series of robustness tests, this empirical conclusion is still valid. (ⅱ) The inhibitory effect of different waves of e-commerce pilot cities on carbon emissions sequentially decreases. The e-commerce pilot policy has a greater effect on reducing carbon emissions in non-old industrial based cities and non-resource-based cities. (ⅲ) Implementing the e-commerce pilot city policy mainly reduces urban carbon emissions by optimizing resource allocation, reducing energy consumption and upgrading the industrial structure. (ⅳ) In addition, implementing the e-commerce pilot city policy has a significant positive carbon-reducing linkage effect with the carbon trading pilot policy and the low-carbon city pilot policy. The findings of this paper provide empirical evidence for carbon emission reduction, which has implications for upgrading urban construction patterns and promoting green urban development.

Factors affecting firms' green technology innovation: an evolutionary game based on prospect theory

In the context of green development and the construction of ecological civilization, a key issue for governments is how to promote firms' green technology innovation. Assuming the bounded rationality of decision-makers, this paper constructs a game model of green technology innovation between firms and the government based on prospect theory. It dynamically analyzes the decision process and optimal strategy under different scenarios and uses numerical simulation to identify the influencing factors. There are three main findings. (1) Firms' green technology innovation decisions depend on the net income difference between strategies. Environmental regulation encourages firms to carry out green technology innovation by increasing the environmental costs to non-green technology innovation firms and increasing the income of green technology innovation firms. (2) Uncertainty and the behavioral characteristics of managers significantly affect green technology innovation. Firms' green technology innovation is positively correlated with the success rate of green technology innovation, whereas is negatively correlated with perceived value sensitivity and loss aversion. (3) There is instrumental heterogeneity in the incentive effect of environmental regulation on firms' green technology innovation. The most effective tool is comprehensive environmental regulation, followed by punishment and then subsidy. The research provides a reference for governments to formulate environmental regulations and firms to manage innovation.

Impact of distance between corporate registration and monitoring stations on environmental performance - Evidence from air quality monitoring stations

Several countries are adopting vertical environmental regulations (air quality monitoring stations) to control pollution. However, there is a relative lack of research analysing environmental regulations and performance from a geographic distance perspective. This study introduces atmospheric quality monitoring stations as a type of environmental regulation using data from Chinese listed companies from 2010 to 2019 to determine the effect of monitoring station distance on corporate environmental performance and the moderating role of corporate strategy. This analysis yielded the following findings. First, based on institutional and signalling theories, we find that monitoring station distance inhibits environmental performance. Second, disclosure, digital transformation, and environmental strategies can reverse the negative effects of monitoring stations. Third, while market drivers improve the ability to monitor station distances, political corruption hinders this. Fourth, firm heterogeneity analysis tells us that the "crowding out" effect of monitoring station distance is more significant for state-owned enterprises, high-tech firms, and heavy polluters. Finally, we found that the monitoring role of stations can be fully utilised only if they are established within a certain distance from the enterprise. These findings are important for establishing air quality monitoring stations and corporate environmental performance in developing countries, including China.