Open Access Journal Article

Innovation under environmental constraints: Does corporate environmental responsibility matter in green innovation?

by Haitao Wu a orcid ,  Shiyao Xia a ,  Xiaofei Long a ,  Jingyan Chen a ,  Chenzejia Li a  and  Yu Hao a,b,c,d,e,*
a
School of Management and Economics, Beijing Institute of Technology, China
b
Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, China
c
Sustainable Development Research Institute for Economy and Society of Beijing, Beijing, China
d
Beijing Key Lab of Energy Economics and Environmental Management, Beijing, China
e
Yangtze Delta Region Academy of Beijing Institute of Technology, Jiaxing, China
*
Author to whom correspondence should be addressed.
JIE  2024 1(4):21; https://doi.org/10.58567/jie01040005
Received: 15 November 2023 / Accepted: 26 December 2023 / Published Online: 15 January 2024
View Full-Text
Download PDF

Abstract

When human civilization is thriving to the rapid economic and social development, the deteriorating ecological environment has also pressured the society to put environmental protection issues on the agenda future development. Therefore, green innovation is not merely a requirement for a corporate’s long-term development but the basics of sustainable development of human society. As an objective indicator to measure a company's commitment to social responsibility, corporate environmental responsibility has an extremely important impact on a corporate's business philosophy and innovation strategy. However, the existing literature rarely studies between these two variables. This paper collects the data of listed companies from 2010 to 2019 and empirically tests the impact of corporate environmental responsibility on corporate green innovation. The study finds that corporate environmental responsibility can promote green innovation by reducing financing constraints, improving corporate governance and increasing government subsidies and R&D investment, and the result is still significant under a series of robustness checks. The placebo test suggests that the Jiangsu enterprise responsibility construction pilot has facilitated the development of enterprises' green innovation to a great extent. The conclusions enrich existing literature on corporate environmental responsibility and corporate green innovation, providing implications for government policy orientation, social atmosphere guidance and corporate strategic decision-making process.

Keywords: Corporate social responsibility; Corporate green innovation; Finance constraint; Corporate governance; Government subsidy; Research and development investment;
Copyright: © 2024 by Wu, Xia, Long, Chen, Li and Hao. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Share and Cite

ACS Style
Wu, H.; Xia, S.; Long, X.; Chen, J.; Li, C.; Hao, Y. Innovation under environmental constraints: Does corporate environmental responsibility matter in green innovation?. Journal of Information Economics, 2023, 1, 21. https://doi.org/10.58567/jie01040005
AMA Style
Wu H, Xia S, Long X, Chen J, Li C, Hao Y. Innovation under environmental constraints: Does corporate environmental responsibility matter in green innovation?. Journal of Information Economics; 2023, 1(4):21. https://doi.org/10.58567/jie01040005
Chicago/Turabian Style
Wu, Haitao; Xia, Shiyao; Long, Xiaofei; Chen, Jingyan; Li, Chenzejia; Hao, Yu 2023. "Innovation under environmental constraints: Does corporate environmental responsibility matter in green innovation?" Journal of Information Economics 1, no.4:21. https://doi.org/10.58567/jie01040005
APA style
Wu, H., Xia, S., Long, X., Chen, J., Li, C., & Hao, Y. (2023). Innovation under environmental constraints: Does corporate environmental responsibility matter in green innovation?. Journal of Information Economics, 1(4), 21. https://doi.org/10.58567/jie01040005

Article Metrics

Article Access Statistics

References

  1. Amore, M. D., & Bennedsen, M. (2016). Corporate governance and green innovation. Journal of Environmental Economics and Management 75, 54-72 https://doi.org/10.1016/j.jeem.2015.11.003
  2. Auty, R. (2002). Sustaining development in mineral economies: the resource curse thesis. Routledge
  3. Bansal, P., & Clelland, I. (2004). Talking trash: Legitimacy, impression management, and unsystematic risk in the context of the natural environment. Academy of Management journal 47(1), 93-103 https://doi.org/10.5465/20159562
  4. Berrone, P., Fosfuri, A., Gelabert, L., & Gomez‐Mejia, L. R. (2013). Necessity as the mother of ‘green’inventions: Institutional pressures and environmental innovations. Strategic Management Journal 34(8), 891-909 https://doi.org/10.1002/smj.2041
  5. Bertrand M. and Mullainathan S. (2003) Enjoying the Quiet Life? Corporate Governance and Managerial Preferences. Journal of Political Economy 111, 1043-1075 https://doi.org/10.1086/376950
  6. Bloom N, Schankerman M, Van Reenen J. (2013). Identifying Technology Spillovers and Product Market Rivalry. Econometrica 81(4), 1347–139 https://doi.org/10.3982/ECTA9466
  7. Bloom, N., Genakos, C., Martin, R., & Sadun, R. (2010). Modern management: good for the environment or just hot air?. The economic journal 120(544), 551-572 https://doi.org/10.1111/j.1468-0297.2010.02351.x
  8. Bogliacino, F., & Pianta, M. (2013). Profits, R&D, and innovation-a model and a test. Industrial and Corporate change 22(3), 649-678 https://doi.org/10.1093/icc/dts028
  9. Carboni, O. A. (2017). The effect of public support on investment and R&D: An empirical evaluation on European manufacturing firms. Technological Forecasting and Social Change 117, 282-295 https://doi.org/10.1016/j.techfore.2016.11.017
  10. Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of management review 4(4), 497-505 https://doi.org/10.5465/amr.1979.4498296
  11. Chen, Y. S., Lai, S. B., & Wen, C. T. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of business ethics 67(4), 331-339 https://doi.org/10.1007/s10551-006-9025-5
  12. Chen, Z.; Nie, P. (2016). Effects of carbon tax on social welfare: A case study of China. Appl. Energy 183, 1607–1615 https://doi.org/10.1016/j.apenergy.2016.09.111
  13. Ching, H. S., Hsiao, C., Wan, S. K., & Wang, T. (2011). Economic benefits of globalization: The impact of entry to the WTO on China's growth. Pacific Economic Review 16(3), 285-301 https://doi.org/10.1111/j.1468-0106.2011.00548.x
  14. De Villiers, C., Naiker, V., & Van Staden, C. J. (2011). The effect of board characteristics on firm environmental performance. Journal of Management 37(6), 1636-1663 https://doi.org/10.1177/0149206311411506
  15. Deegan, C., & Blomquist, C. (2006). Stakeholder influence on corporate reporting: An exploration of the interaction between WWF-Australia and the Australian minerals industry. Accounting, organizations and society 31(4-5), 343-372 https://doi.org/10.1016/j.aos.2005.04.001
  16. Dong, Y., Wang, X., Jin, J., Qiao, Y., & Shi, L. (2014). Effects of eco-innovation typology on its performance: Empirical evidence from Chinese enterprises. Journal of Engineering and Technology Management 34, 78-98 https://doi.org/10.1016/j.jengtecman.2013.11.001
  17. Dragone, D., Lambertini, L., & Palestini, A. (2013). The incentive to invest in environmental-friendly technologies: dynamics makes a difference. In Green growth and sustainable development (pp. 165-188). Springer, Berlin, Heidelberg
  18. Du, X., Jian, W., Zeng, Q., & Du, Y. (2014). Corporate environmental responsibility in polluting industries: Does religion matter?. Journal of Business Ethics 124(3), 485-507 https://doi.org/10.1007/s10551-013-1888-7
  19. Du, Z., & Zhang, L. (2015). Home-purchase restriction, property tax and housing price in China: A counterfactual analysis. Journal of Econometrics 188(2), 558-568 https://doi.org/10.1016/j.jeconom.2015.03.018
  20. Dzonzi-Undi, J.; Li, S. (2016). Policy influence on clean coal uptake in China, India, Australia, and USA. Environ. Prog. Sustain. Energy 35, 906–913 https://doi.org/10.1002/ep.12288
  21. Egbu, C. O. (2004). Managing knowledge and intellectual capital for improved organizational innovations in the construction industry: an examination of critical success factors. Engineering, Construction and Architectural Management https://doi.org/10.1108/09699980410558494
  22. Fooks, G., Gilmore, A., Collin, J., Holden, C., & Lee, K. (2013). The limits of corporate social responsibility: techniques of neutralization, stakeholder management and political CSR. Journal of business ethics 112(2), 283-299 https://doi.org/10.1007/s10551-012-1250-5
  23. Freeman, R. E. (1994). The politics of stakeholder theory: Some future directions. Business ethics quarterly, 409-421 https://doi.org/10.1007/978-3-031-04564-6_5
  24. Gao, Y., Wu, J., & Hafsi, T. (2017). The inverted U‐shaped relationship between corporate philanthropy and spending on research and development: A case of complementarity and competition moderated by firm size and visibility. Corporate Social Responsibility and Environmental Management 24(6), 465-477 https://doi.org/10.1002/csr.1420
  25. Ghoul, S. E., Guedhami, O., & Kim, Y. (2017). Country-level institutions, firm value, and the role of corporate social responsibility initiatives. Journal of International Business Studies 48(3), 360-385 https://doi.org/10.1057/jibs.2016.4
  26. Giebel M, Kraft K. (2020). Bank credit supply and firm innovation behavior in the financial crisis. J Bank Financ 121, 105961 https://doi.org/10.1016/j.jbankfin.2020.105961
  27. Haley, E. (1996). Exploring the construct of organization as source: Consumers' understandings of organizational sponsorship of advocacy advertising. Journal of advertising 25(2), 19-35 https://www.jstor.org/stable/4189000
  28. Hao, J., & He, F. (2022). Corporate social responsibility (CSR) performance and green innovation: Evidence from China. Finance Research Letters 48, 102889 https://doi.org/10.1016/j.frl.2022.102889
  29. Hasan, M. M., & Jiang, H. (2022). Political sentiment and corporate social responsibility. The British Accounting Review, 101170 https://doi.org/10.1016/j.bar.2022.101170
  30. Himmelberg, C. P., & Petersen, B. C. (1994). R & D and internal finance: A panel study of small firms in high-tech industries. The review of economics and statistics, 38-51 https://doi.org/10.2307/2109824
  31. Horbach, J. (2008). Determinants of environmental innovation-New evidence from German panel data sources. Research policy 37(1), 163-173. https://doi.org/10.1016/j.respol.2007.08.006
  32. Horbach, J., Rammer, C., & Rennings, K. (2012). Determinants of eco-innovations by type of environmental impact—The role of regulatory push/pull, technology push and market pull. Ecological economics 78, 112-122 https://doi.org/10.1016/j.ecolecon.2012.04.005
  33. Hsu, P. H., Tian, X., & Xu, Y. (2014). Financial development and innovation: Cross-country evidence. Journal of financial economics 112(1), 116-135 https://doi.org/10.1016/j.jfineco.2013.12.002
  34. Hull, C. E., & Rothenberg, S. (2008). Firm performance: The interactions of corporate social performance with innovation and industry differentiation. Strategic management journal 29(7), 781-789 https://doi.org/10.1002/smj.675
  35. ISEA. (1999). Accountability 1000 (AA1000) Framework: Standards, Guidelines and Professional Qualification. The Institute of Social and Ethical Accountability, London
  36. Ivus, O., Jose, M., & Sharma, R. (2021). R&D tax credit and innovation: Evidence from private firms in india. Research Policy 50(1), 104128 https://doi.org/10.1016/j.respol.2020.104128
  37. Jaffe, A. B., & Stavins, R. N. (1995). Dynamic incentives of environmental regulations: The effects of alternative policy instruments on technology diffusion. Journal of environmental economics and management 29(3), S43-S63 https://doi.org/10.1006/jeem.1995.1060
  38. James, S. P. & Cooper, D. E. (2017). Buddhism, virtue and environment. Routledge
  39. Jiang, F., Ma, Y., & Wang, X. (2020). Multiple blockholders and earnings management. Journal of Corporate Finance 64, 101689 https://doi.org/10.1016/j.jcorpfin.2020.101689
  40. Jiang, F., Shen, Y., & Cai, X. (2022). Can multiple blockholders restrain corporate financialization?. Pacific-Basin Finance Journal 75, 101827 https://doi.org/10.1016/j.pacfin.2022.101827
  41. Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Harvard business review 86(12), 57-68
  42. Joo, H. Y., Seo, Y. W., & Min, H. (2018). Examining the effects of government intervention on the firm’s environmental and technological innovation capabilities and export performance. International Journal of Production Research 56(18), 6090-6111 https://doi.org/10.1080/00207543.2018.1430902
  43. Kammerer, D. (2009). The effects of customer benefit and regulation on environmental product innovation.: Empirical evidence from appliance manufacturers in Germany. Ecological Economics 68(8-9), 2285-2295 https://doi.org/10.1016/j.ecolecon.2009.02.016
  44. Kock, C. J., Santalo, J., & Diestre, L. (2012). Corporate governance and the environment: what type of governance creates greener companies?. Journal of Management Studies 49(3), 492-514
  45. Lehr, U., & Löbbe, K. (2000). The Joint Project “Innovation Impacts of Environmental Policy”. In Innovation-oriented environmental regulation (pp. 109-123). Physica, Heidelberg
  46. Li Q, Wang J, Cao G, Zhang J. (2021). Financial constraints, government subsidies, and corporate innovation. PLoS One 16(11): e0259642. https://doi.org/10.1371/journal.pone.0259642
  47. Li, D., Cao, C., Zhang, L., Chen, X., Ren, S., & Zhao, Y. (2017). Effects of corporate environmental responsibility on financial performance: The moderating role of government regulation and organizational slack. Journal of Cleaner Production 166, 1323-1334 https://doi.org/10.1016/j.jclepro.2017.08.129
  48. Li, K. T., & Bell, D. R. (2017). Estimation of average treatment effects with panel data: Asymptotic theory and implementation. Journal of Econometrics 197(1), 65-75 https://doi.org/10.1016/j.jeconom.2016.01.011
  49. Liu, X., Li, X., & Li, H. (2016). R&D subsidies and business R&D: Evidence from high-tech manufacturing firms in Jiangsu. China Economic Review 41, 1-22. https://doi.org/10.1016/j.chieco.2016.08.003
  50. Liu, Z., Li, W., Hao, C., & Liu, H. (2021). Corporate environmental performance and financing constraints: An empirical study in the Chinese context. Corporate Social Responsibility and Environmental Management 28(2), 616-629 https://doi.org/10.1002/csr.2073
  51. Lončar, D., Paunković, J., Jovanović, V., & Krstić, V. (2019). Environmental and social responsibility of companies cross EU countries–Panel data analysis. Science of the total environment 657, 287-296 https://doi.org/10.1016/j.scitotenv.2018.11.482
  52. Luo, X., & Du, S. (2015). Exploring the relationship between corporate social responsibility and firm innovation. Marketing Letters 26(4), 703-714 https://doi.org/10.1007/s11002-014-9302-5
  53. McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: correlation or misspecification?. Strategic management journal 21(5), 603-609 https://doi.org/10.1002/(SICI)1097-0266(200005)21:5<603::AID-SMJ101>3.0.CO;2-3
  54. Milliman, S. R., & Prince, R. (1989). Firm incentives to promote technological change in pollution control. Journal of Environmental economics and Management 17(3), 247-265 https://doi.org/10.1016/0095-0696(89)90019-3
  55. Mishra, S., & Suar, D. (2010). Does corporate social responsibility influence firm performance of Indian companies?. Journal of business ethics 95(4), 571-601 https://doi.org/10.1007/s10551-010-0441-1
  56. Mughal, Y. H., Jehangir, M., Khan, M., & Saeed, M. (2021). Nexus between corporate social responsibility and firm’s performance: A panel data approach. International Journal of Finance & Economics 26(2), 3173-3188 https://doi.org/10.1002/ijfe.1956
  57. OECD background papers. (2012). The future of eco-innovation: The role of business models in green transformation
  58. Oltra, V. (2008). Environmental innovation and industrial dynamics: the contributions of evolutionary economics. Cahiers du GREThA 28(27), 77-89
  59. Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies 24(3), 403-441 https://doi.org/10.1177/0170840603024003910
  60. Ouyang, M., & Peng, Y. (2015). The treatment-effect estimation: A case study of the 2008 economic stimulus package of China. Journal of Econometrics 188(2), 545-557 https://doi.org/10.1016/j.jeconom.2015.03.017
  61. Qin, Y., Harrison, J., & Chen, L. (2019). A framework for the practice of corporate environmental responsibility in China. Journal of Cleaner Production 235, 426-452 https://doi.org/10.1016/j.jclepro.2019.06.245
  62. Rehman, Z. U., Khan, A., & Rahman, A. (2020). Corporate social responsibility's influence on firm risk and firm performance: the mediating role of firm reputation. Corporate Social Responsibility and Environmental Management 27(6), 2991-3005 https://doi.org/10.1002/csr.2018
  63. Rennings, K. (2000). Redefining innovation-eco-innovation research and the contribution from ecological economics. Ecological economics 32(2), 319-332 https://doi.org/10.1016/S0921-8009(99)00112-3
  64. Sarkar, A., Qian, L., & Peau, A. K. (2020). Overview of green business practices within the Bangladeshi RMG industry: competitiveness and sustainable development perspective. Environmental Science and Pollution Research 27(18), 22888-22901 https://doi.org/10.1007/s11356-020-08816-y
  65. Scarpellini, S., Portillo-Tarragona, P., & Marin-Vinuesa, L. M. (2019). Green patents: a way to guide the eco-innovation success process?. Academia Revista Latinoamericana de Administracion
  66. Schilling, Melissa A.; Phelps, Corey C. (2007). Interfirm Collaboration Networks: The Impact of Large-Scale Network Structure on Firm Innovation. Management Science 53(7), 1113–1126 https://doi.org/10.1287/mnsc.1060.0624
  67. Suriyapongprapai, T., Chatjuthamard, P., Leemakdej, A., & Treepongkaruna, S. (2022). Stakeholder engagement, military ties, and firm performance. Corporate Social Responsibility and Environmental Management 29(2), 469-479 https://doi.org/10.1002/csr.2212
  68. Tou, Yuji; Watanabe, Chihiro; Moriya, Kuniko; Vurpillat, Victor; Neittaanmäki, Pekka. (2019). A New Concept of R&D in NEO Open Innovation: Transformation of R&D Triggered By Amazon. International Journal of Managing Information Technology 11 (1), 17-35 https://doi.org/10.5121/ijmit.2019.11102
  69. Tsang, A., Frost, T., & Cao, H. (2022). Environmental, Social, and Governance (ESG) Disclosure: A Literature Review. The British Accounting Review, 101149 https://doi.org/10.1016/j.bar.2022.101149
  70. Wang, Y., & Yu, L. (2021). Can the current environmental tax rate promote green technology innovation?-Evidence from China’s resource-based industries. Journal of Cleaner Production 278, 123443 https://doi.org/10.1016/j.jclepro.2020.123443
  71. Wei, W., Pang, S., Wang, X., Zhou, L., Xie, B., Zhou, J., & Li, C. (2020). Temperature vegetation precipitation dryness index (TVPDI)-based dryness-wetness monitoring in China. Remote Sensing of Environment 248, 111957 https://doi.org/10.1016/j.rse.2020.111957
  72. Wickert, C., Scherer, A. G., & Spence, L. J. (2016). Walking and talking corporate social responsibility: Implications of firm size and organizational cost. Journal of Management Studies 53(7), 1169-1196 https://doi.org/10.1111/joms.12209
  73. Wong, A. K. F., and S. S. Kim. (2020). Development and validation of standard hotel corporate social responsibility (CSR) scale from the employee perspective. International Journal of Hospitality Management 87, 102507 https://doi.org/10.1016/j.ijhm.2020.102507
  74. Wong, C. W., Miao, X., Cui, S., & Tang, Y. (2018). Impact of corporate environmental responsibility on operating income: Moderating role of regional disparities in China. Journal of Business Ethics 149(2), 363-382 https://doi.org/10.1007/s10551-016-3092-z
  75. Xu, J., Liu, F., & Shang, Y. (2020). R&D investment, ESG performance and green innovation performance: evidence from China. Kybernetes https://doi.org/10.1108/K-12-2019-0793
  76. Xu, M., & Zhang, C. (2009). Bankruptcy prediction: the case of Japanese listed companies. Review of accounting studies 14(4), 534-558 https://doi.org/10.1007/s11142-008-9080-5
  77. Xu, Q., Lu, Y., Lin, H., & Li, B. (2021). Does corporate environmental responsibility (CER) affect corporate financial performance? Evidence from the global public construction firms. Journal of Cleaner Production 315, 128131 https://doi.org/10.1016/j.jclepro.2021.128131
  78. Xue, Y., Jiang, C., Guo, Y., Liu, J., Wu, H., & Hao, Y. (2022). Corporate Social Responsibility and High-quality Development: Do Green Innovation, Environmental Investment and Corporate Governance Matter?. Emerging Markets Finance and Trade 1-24 https://doi.org/10.1080/1540496X.2022.2034616
  79. Yang D, & Chai H M. (2015). Driving factors of enterprise green technology innovation and its impact on performance. China Population, Resources and Environment (S2), 132-136
  80. Yang, R., Tang, W., & Zhang, J. (2021). Technology improvement strategy for green products under competition: The role of government subsidy. European Journal of Operational Research 289(2), 553-568 https://doi.org/10.1016/j.ejor.2020.07.030
  81. Zhang, Z. (2022). Can the Sponge City Project improve the stormwater drainage system in China?-Empirical evidence from a quasi-natural experiment. International Journal of Disaster Risk Reduction 75, 102980 https://doi.org/10.1016/j.ijdrr.2022.102980
  82. Zhou, L., Zhou, C., Che, L., & Wang, B. (2020). Spatio-temporal evolution and influencing factors of urban green development efficiency in China. Journal of Geographical Sciences 30(5), 724-742 https://doi.org/10.1007/s11442-020-1752-5