The Impact of River Chief System Diffusion Modes on Corporate Green Innovation

Yongjun Tang, Danyang Zhan, Yongbin Han (), Feifei Tao and Yuqiu Qi
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Yongjun Tang: School of Business, Hohai University, Nanjing 211100, China
Danyang Zhan: School of Business, Hohai University, Nanjing 211100, China
Yongbin Han: School of Business, Yangzhou University, Yangzhou 225127, China
Feifei Tao: College of Computer Science and Software Engineering, Hohai University, Nanjing 211100, China
Yuqiu Qi: School of Business, Hohai University, Nanjing 211100, China

Sustainability, 2025, vol. 17, issue 21, 1-24

Abstract: The River Chief System (RCS), an innovative policy for sustainable water governance in China, has diffused through parallel and hierarchical modes, exerting heterogeneous impacts on corporate green innovation—a key driver of sustainable development. Using a multi-period difference-in-differences (DID) design and data from A-share listed companies in Shanghai and Shenzhen (2005–2022), this study examines how these diffusion modes affect corporate green innovation, including its breakthrough and incremental forms. The study finds that (1) under the parallel diffusion mode, RCS does not significantly promote corporate green innovation overall and even exhibits an inhibitory effect in capital-intensive industries; (2) Under the hierarchical diffusion mode, the RCS significantly improves the level of corporate green innovation, with a notably stronger promoting effect on breakthrough innovation than incremental innovation; (3) The hierarchical diffusion mode promotes green innovation by alleviating corporate financing constraints and enhancing management’s green awareness; (4) Heterogeneity analysis further reveals clear regional and industrial disparities in policy effectiveness: hierarchical diffusion shows significant effects in eastern and western regions as well as in technology-intensive industries, but still exerts an inhibitory effect in the central region and labor-intensive industries. This study provides empirical evidence on the differential effects of environmental policy dissemination and offers insights for optimizing RCS implementation and promoting sustainable economic development.

Keywords: river chief system (RCS); policy diffusion; corporate green innovation; breakthrough innovation; multi-period difference-in-differences (DID) (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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