Choosing between quality and quantity in environmental innovation under institutional complexity

Heng Yin

Finance Research Letters, 2025, vol. 76, issue C

Abstract: While previous research on environmental innovation offers insights into environmental innovation quantity incentives, less attention has been paid to environmental innovation quality. The present study fills this gap by investigating how government and shareholders can affect firms’ environmental innovation quantity and quality. We suggest that firms with higher state ownership respond to government mandates with higher environmental innovation quantity and quality. Moreover, firms suffering financial difficulties lead to lower environmental innovation quantity and quality. We further propose that firms facing mandates from both government and shareholders exhibit a decoupling between quantity and quality. A sample of Chinese listed firms from 2008 to 2019 supports our arguments. The research contributes to the environmental innovation and institutional complexity literature by exploring the antecedents of environmental innovation quality and identifying the decoupling between quantity and quality.

Keywords: Environmental innovation; Quality; Quantity; Institutional complexity (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001564

DOI: 10.1016/j.frl.2025.106892

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