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Government intervention and technological innovation in the wind power industry in China: The role of industrial environmental turbulence

Zihao Jiang and Jiarong Shi

Applied Energy, 2023, vol. 344, issue C, No S0306261923006293

Abstract: Wind power is accelerating the transformation of China’s energy market from a primary to a renewable energy-dominated market. The Chinese government has engaged in many supportive and regulatory interventions to guide and stimulate wind power enterprises to simultaneously improve existing technologies and develop new solutions. However, the effectiveness of policies and the potential interactions among them have not been empirically assessed. Firms in emerging economies typically survive and develop in turbulent environments. How such an environment affects the effectiveness of government intervention remains a black box. This study aimed to investigate the impact of wind power policies and their mix on exploitative and exploratory innovations in China, along with the moderating role of environmental turbulence. Using data on listed companies in the Chinese wind power industry from 2006 to 2020 and two-way fixed effects regressions, this study assesses and compares the impacts of different policy categories and their mix on exploitative and exploratory innovations. We also distinguish between market and technological turbulence, and clarify the moderating effect of environmental turbulence. In addition, this study ensures the robustness of the empirical results by altering the dependent variables and eliminating the interference of endogeneity using the IV-2SLS method. The results indicate that supportive and regulatory policies and their mix facilitate exploitative and exploratory innovations. Market turbulence enhances the relationship between policies and their mix and exploitative innovation, whereas technological turbulence enhances the relationship between policies and their mix and exploratory innovation. This is one of the first studies to evaluate the impacts of policies and their mix on the exploitative and exploratory innovations of renewable energy sectors in emerging economies, advancing the understanding of innovation growth in emerging economies and enriching research on renewable energy policies. Additionally, this study links environmental turbulence to government intervention, and thus contributes to the identification of policy effectiveness boundaries.

Keywords: Government intervention; Policy mix; Exploitative innovation; Exploratory innovation; Environmental turbulence (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1016/j.apenergy.2023.121265

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