 Corruption pays off: How environmental regulations promote corporate innovation in a developing countryTong Fu and Ze Jian Ecological Economics, 2021, vol. 183, issue C Abstract: The Porter hypothesis asserts that well-designed regulations can foster innovation for a “win-win” solution, but it requires environmental regulations to be strict but flexible, which is impractical for most developing countries. This paper explores how environmental regulations in a developing country can spur corporate innovation. Using the geographic distribution of wars during 1644 and 1911 as an instrument, we document that the stringency of environmental regulations in China promotes corporate innovation only when interacted with a region with high corruption. We further identify that the causal effect of the stringency on corporate innovation is mediated by bribery expenditures statistically and economically, and all the corresponding direct effects are insignificant. Ultimately, this paper confirms that corruption is the key mechanism in the Porter effect in a developing country. Keywords: China; Corporate innovation; Corruption; Environmental regulat ion (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:183:y:2021:i:c:s0921800921000276 DOI: 10.1016/j.ecolecon.2021.106969 Access Statistics for this article Ecological Economics is currently edited by C. J. Cleveland More articles in Ecological Economics from Elsevier |
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