The Impact of Corporate Innovation on Environmental Performance: The Moderating Effect of Financing Constraints and Government Subsidies

Hui Deng, Chuang Li () and Liping Wang
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Hui Deng: Research Center for Energy Economics, Henan Polytechnic University, Jiaozuo 454000, China
Chuang Li: Research Center for Energy Economics, Henan Polytechnic University, Jiaozuo 454000, China
Liping Wang: Finance and Economics College, Jimei University, Xiamen 361021, China

Sustainability, 2022, vol. 14, issue 18, 1-18

Abstract: As an essential means of reducing environmental stress, corporate innovation faces financial pressure and financial risk; so, whether corporate innovation contributes to environmental performance is related to the firm’s external capital environment (financing constraints and government subsidies). This study explores the relationships between corporate innovation, environmental performance, and the external capital environment using 1127 observations of China’s energy-intensive public companies from 2012 to 2020. The outcomes indicate that corporate innovation has a significant positive impact on environmental performance. Financing constraints provide a negative moderation of the relationship between corporate innovation and environmental performance, while government subsidies provide a positive moderation. That is, firms with high financing constraints are less likely to increase their environmental performance by innovation, while firms with high government subsidies enhance the positive influence of corporate innovation on environmental performance. The moderating effect of financing constraints varies at different levels of government subsidies, i.e., high levels of government subsidies diminish the negative moderating effect of the financing constraints between corporate innovation and environmental performance. This study’s conclusions provide a reference for the government in formulating corporate innovation subsidies and financial policies and a basis for the decision-making behaviors of enterprises regarding environmental protection and economic development.

Keywords: corporate innovation; environmental performance; external capital environment; financing constraints; government subsidies (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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