Financial flexibility, organizational resilience and corporate green innovation

Linjing Wang, Chunyan Zhao, Yufei Gan and Xiaoxiao Ni

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

Abstract: Understanding the drivers of corporate environmental innovation has become increasingly vital as ecological concerns intensify. While existing research explores various determinants, the complex relationship between financial flexibility and environmental innovation in emerging economies warrants deeper investigation. This study examines how financial flexibility influences green innovation in Chinese listed companies, considering both organizational resilience as a moderator and organizational characteristics as boundary conditions. Through analysis of 26,539 firm-year observations spanning 2008–2022, we employ fixed-effects models and address endogeneity concerns to reveal several key findings. Our results demonstrate that financial flexibility significantly enhances green innovation outcomes, with this relationship strengthened by organizational resilience. Notably, this effect varies substantially across organizational contexts, showing stronger impact in state-owned enterprises and during growth phases of organizational development. These findings indicate that financially adaptable firms demonstrate greater propensity for environmental innovation, particularly when possessing strong adaptive capabilities and supportive institutional structures. By illuminating these contextual variations, our study advances understanding of corporate environmental strategies and provides targeted insights for promoting green innovation across different organizational settings in rapidly industrializing economies.

Keywords: Green innovation; Financial flexibility; Organizational resilience; Environmental sustainability (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:s1544612325001813

DOI: 10.1016/j.frl.2025.106917

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