Impact of environmental policy on the innovation of SMEs: Chinese evidence

Wenqi Luo and Yong Ma

Economic Analysis and Policy, 2023, vol. 79, issue C, 917-928

Abstract: As environmental concerns continue to grow worldwide, the role of environmental policy in promoting sustainable development has become increasingly important. This study examines the impact of environmental policy on the innovation of small and medium-sized enterprises (SMEs) in China, a country where environmental regulation has been rapidly expanding in recent years. The analysis employs a regression model that controls for various firm-level and environmental factors that may affect innovation. A loan guarantee may boost an SME’s chances of acquiring borrowed funds, the number of loans obtained, expenses, capital equipment expenditures, and TFP by 2%, 17.4%, 7.6%, 6.16%, and 5.26%, respectively. Furthermore, the influence of information networks on performance is examined. Environmental policy and open innovation activity, opposite transfer, investor interactions, and SMEs’ success are all examined, with a focus on Chinese SMEs. The findings suggest that policymakers should consider designing more targeted and flexible environmental policies that provide incentives for SMEs to innovate and adopt sustainable practices, while minimizing potential negative impacts on their competitiveness and financial performance.

Keywords: Environment; CS performance; Financial performance; SMEs; China (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:79:y:2023:i:c:p:917-928

DOI: 10.1016/j.eap.2023.06.037

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