Environmental Regulation, Government-Business Relations, and Corporate Green Innovation: Evidence from Low-Carbon City Pilot Policy

Weiqi Hua, Chenglan Liu and Chunzhong Li ()
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Weiqi Hua: Institute of Statistics and Applied Mathematics, Anhui University of Finance and Economics, Bengbu 233010, China
Chenglan Liu: Institute of Statistics and Applied Mathematics, Anhui University of Finance and Economics, Bengbu 233010, China
Chunzhong Li: Institute of Statistics and Applied Mathematics, Anhui University of Finance and Economics, Bengbu 233010, China

Sustainability, 2024, vol. 16, issue 22, 1-23

Abstract: Environmental degradation and economic development have long been seen as incompatible, posing a pressing challenge for society. Government–business collaboration stands as an effective avenue for addressing environmental issues. This paper, using the 2007–2021 Low-Carbon City Pilot (LCCP) program in China as a quasi-natural experiment, explores the impact of governmental environmental regulations on corporate green innovation and examines the moderating role of government–business collusion. The findings indicate that the LCCP policy has effectively promoted corporate green technological innovation, with results remaining robust across various sensitivity tests. Heterogeneity analysis further reveals that the policy’s impact is more pronounced in the eastern regions, state-owned enterprises, and low-tech industries. Moreover, government–business collusion significantly undermines the benefits of green innovation, though this effect is partially alleviated when local government officials are replaced. Under the influence of government environmental regulation, green innovation fosters the sustainable development of enterprises. However, the formation of collusion between government and business diminishes the incentive for companies to take on environmental and social responsibilities. The study enriches the existing literature on environmental policy factors and offers both theoretical and practical insights for the government in formulating relevant environmental policies and promoting corporate green innovation.

Keywords: environmental regulation; low-carbon city pilot; green innovation; government–business relations; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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