Impact of Environmental Regulation Intensity on Green Technology Innovation: From the Perspective of Political and Business Connections

Yu-Hong Ai, Di-Yun Peng and Huan-Huan Xiong
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Yu-Hong Ai: School of Management, Nanchang University, Nanchang 330031, China
Di-Yun Peng: School of Economics and Management, Nanchang University, Nanchang 330031, China
Huan-Huan Xiong: School of Economics and Management, Nanchang University, Nanchang 330031, China

Sustainability, 2021, vol. 13, issue 9, 1-23

Abstract: With heavy air pollution and the highest CO 2 emissions in the world, China is in urgent need of technology innovation to improve the energy efficiency and control the pollution emission. This study empirically investigates the impact of environmental regulation intensity, political connections, and business connections on green technology innovation in China’s firms. The authors employ a panel data regression analysis on a dataset that comprises 884 observations for A-share listed companies from 2016 to 2019, owing to the availability of data. The results show: (1) Environmental regulation intensity (ERI) has a U-shaped effect on green technology innovation (GTI), which means GTI is inhibited by ERI in the early stage but gets promoted in the long run; (2) Political connections positively moderate the relationship between ERI and GTI mainly because of crowding-out effect and resource effect; (3) Business connections have a negative impact on the relationship between ERI and GTI, resulting from knowledge acquisition and lock-in; (4) Business connections have a greater moderating effect than political connections probably because political ties lack an effective mechanism to ensure long-term cooperation with the enterprises; (5) However, with regard to those firms in the non-heavily polluting industry, both connections moderate the relationship between ERI and GTI in an opposite direction to the main effect. The research results help policy makers formulate relevant policies, based on the impact of environmental regulation and social connections on green technology innovation.

Keywords: environmental regulation intensity; green technology innovation; political connection; business connection; China (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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