The Impact of Market and Non-Market-Based Environmental Policy Instruments on Firms’ Sustainable Technological Innovation: Evidence from Chinese Firms

Jie Jiang (), Qihang Zhang and Yifan Hui
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Jie Jiang: School of Intellectual Property, Nanjing University of Science and Technology, Nanjing 210014, China
Qihang Zhang: School of Intellectual Property, Nanjing University of Science and Technology, Nanjing 210014, China
Yifan Hui: School of Mathematics and Statistics, University of Glasgow, Glasgow G12 8QQ, UK

Sustainability, 2023, vol. 15, issue 5, 1-21

Abstract: A firm’s sustainable technological innovation (STI) is an important strategy to cope with the global challenges of the climate emergency and resource constraints. To encourage firms to pursue sustainable innovation, the government put its efforts into designing a proper environmental policy (EP). According to Porter’s hypothesis, a well-designed and flexible EP will advance the pace of a firm’s innovation. This paper argues that a flexible EP portfolio combining market and non-market-based EP instruments may affect a firm’s STI. Market-based EP instruments are cost-effective and consistent from a long-term view, whereas non-market-based EP instruments are more forceful and effective in the short term. Hence, these two kinds of EP instruments could complement each other. Furthermore, technical executives in top management teams will moderate the relationships between EP instruments and firms’ STI. Data analysis results of 618 Chinese public firms, who constantly participated in R&D activities during 2015–2019, supported these hypotheses. Contributions to EP and firm innovation theory, as well as suggestions for policymakers and firms’ top management teams, are discussed.

Keywords: environmental policy; policy mix; sustainable technological innovation; technical executives (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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