Inconsistent effects of heterogeneous environmental policy on corporate green innovation: Evidence from China's companies and policy quantification

Abstract

The government's adoption of environmental policies plays a critical role in promoting corporate green innovation (CGI). However, it is unclear about how heterogeneous environmental policies affect CGI. In this study, a cross-sectional assessment of the effects of heterogeneous environmental policies on CGI are evaluated by constructing China's provincial environmental policy intensity, using microdata of 744 listed companies from 2006 to 2020. The results indicate that while environmental policy has contributed to a quantitative increase of green innovation, it has induced a decrease in quality. This effect is varying with different conditions such as region, energy consumption, pollution, and corporate ownership. Mechanism analysis indicates that heterogeneous environmental policies have inconsistent paths on CGI through both tangible and intangible factors. This paper provides empirical evidence of how heterogeneous environmental policies affect CGI, which is helpful for deepening the understand of policy effects and the differences in corporate responses under different conditions and mechanisms. Simultaneously, the results provide diverse insights and implications for theory and practice.