Climate risk and green innovation in semi-conductor industry: Do supply chain concentration and resilience matter?

Abstract

Climate change presents a universal challenge affecting countries on a global scale. Given the exigencies imposed by extreme weather events and environmental degradation, corporations across diverse sectors have embraced green innovations (GI) as a strategy to address the imperatives of climate change adaptation and mitigation. This study examines the complex relationship between climate risks and corporate GI by analyzing data from 146 firms within the Chinese semiconductor industry over the period 2007 to 2022. Employing a combination of Poisson-Pseudo-Maximum-Likelihood (PPML), panel threshold, and moderating effect models, the analysis seeks to uncover the nuanced dynamics between environmental risks and corporate sustainability practices. The findings underscore that both annual and longer-term climate risks, as measured by the climate risk index (CRI), exert a significant promotional effect on GI. Additionally, the study reveals that CRI acts as a stimulus for GI by augmenting R&D intensity, attracting investments in green finance, and enhancing financial flexibility. Furthermore, the study incorporates an assessment of corporate resilience capacity through threshold analysis, shedding light on the pivotal nexus between CRI and GI. This nexus exhibits a pronounced positive association within the intermediate range delineated by two threshold values. Additionally, a moderating effect analysis, taking into consideration supply chain concentration and overall corporate production elements, underscores the reinforcing effect of both supply chain concentration and total factor productivity on the influence of CRI in promoting GI. The study also undertakes a comprehensive exploration of heterogeneity by considering various corporate and regional factors. In light of the findings articulated above, this research puts forth a series of recommendations tailored for managerial decision-making and the policy formulation process.