Green Innovation and Environmental Performance: The Moderating Roles of Governance and Policy

Fatima Batool, Muhammad Mohsin () and Belal Mahmoud Alwadi
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Fatima Batool: School of Finance, Central University of Finance and Economics, 39 South College Road, Haidian District, Beijing 100081, China
Muhammad Mohsin: Department of Computer Science, Bioengineering, Robotics and Systems Engineering (DIBRIS), University of Genoa, 16146 Genoa, Italy
Belal Mahmoud Alwadi: Department of Basic Sciences, Al-Zaytoonah University of Jordan, Queen Alia Airport Street, Amman 11733, Jordan

World, 2025, vol. 6, issue 1, 1-28

Abstract: This study investigates the impact of green innovation (GI) on corporate environmental performance (CEP), while examining the moderating roles of corporate governance practices (CGPs) and environmental policy pressure (EPP). This study uses advanced statistical methods to ensure the reliability of the results. These include techniques such as propensity score matching (PSM), difference-in-differences (DID) analysis with China’s National Green Development Fund (2020) as the policy intervention, and the generalized method of moments (GMM), and this study examines how internal governance mechanisms and external regulatory pressures influence the GI-CEP relationship. The results show that GI significantly increases CEP, and that this effect is amplified by robust CGPs and EPP. By analyzing data from 4026 firm-year observations of A-share listed Chinese companies (2017–2022), the findings highlight the importance of innovation, governance, and policy in achieving sustainable environmental outcomes. This study provides valuable insights for firms and policymakers to foster green innovation and align corporate strategies with global sustainability goals.

Keywords: green innovation; corporate environmental performance; governance practices; environmental policy pressure; sustainable development (search for similar items in EconPapers)
JEL-codes: G15 G17 G18 L21 L22 L25 L26 Q42 Q43 Q47 Q48 R51 R52 R58 (search for similar items in EconPapers)
Date: 2025
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