Does informal environmental regulation matter? Evidence on the different impacts of communities and ENGOs on heavy-polluting firms’ green technology innovation

Linying Guo, Chuan Hu, Mengjuan Fan, Jianghua Mao, Meng Tian, Zihao Wang and Yuanying Wei

Journal of Environmental Planning and Management, 2024, vol. 67, issue 11, 2668-2694

Abstract: Firms, especially heavy-polluting firms, are facing intense pressure from informal environmental regulations, which play a unique role in promoting heavy-polluting firms’ green technology innovation (GTI). Communities and ENGOs are two important informal environmental regulation entities that have different influence mechanisms to stimulate heavy-polluting firms in GTI. The research results indicate that heavy-polluting firms’ GTI follows an inverted U-shape as the number of communities around these firms increases, whereas it follows a positive linear correlation as the number of ENGOs increases. Interestingly, ownership types and administrative hierarchy distance positively moderate the curvilinear and linear relationships. State-owned enterprises (SOEs) are more inclined to maintain their legitimacy by fulfilling communities’ and ENGOs’ environmental requirements than non-SOEs. A shorter administrative hierarchy distance means that firms are supervised by high-level governments. The autonomy effect of lower-level governments does not affect the vigorous enforcement of environmental policies, which also enhances these two relationships.

Date: 2024
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DOI: 10.1080/09640568.2023.2197554

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