Corruption pays off: How environmental regulations promote corporate innovation in a developing country

Fu, Tong; Jian, Ze

doi:10.1016/j.ecolecon.2021.106969

Cited by 89 publications

(28 citation statements)

References 76 publications

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“…PH holds that ER can improve FP. PH is named after M. E. Porter [6], who was the first to propose that a properly designed ER could stimulate innovation, thus making products more competitive. Porter and van der Linde [7] further examined the environment-competitiveness relationship through theoretical and case study approaches and argued that it did not have to involve a trade-off between regulation and competitiveness.…”

Section: The Effect Of Er On Fp Of Firmsmentioning

confidence: 99%

“…There is a massive amount of research on the effect of ER on the FP of firms, but the findings are mixed. The Porter Hypothesis (PH) and its proponents argue that ER can increase the research and development (R&D) investment and innovation level of firms [6], and then improve their productivity [7][8][9][10] and FP [11][12][13][14][15]. However, the Costly Regulation Hypothesis (CRH) and its proponents argue that ERs are trying to reduce the negative external affect caused by business, which increases the costs of compliance for the firms and thus reduces their productivity and FP [16][17][18][19][20].…”

Section: Introductionmentioning

confidence: 99%

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Investigating the ‘Short Pain’ and ‘Long Gain’ Effect of Environmental Regulation on Financial Performance: Evidence from Chinese Listed Polluting Firms

Liu

Dong

et al. 2022

Sustainability

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Environmental regulation affects the financial performance of firms, while the findings are mixed. This paper quantitatively analyzes the current and lagged effect of environmental regulation (ER) on financial performance (FP), based on the data of 361 highly polluting A-shares firms and 936 mildly polluting A-shares firms in China. It is proved that ER exerts a negative effect on the FP of polluting firms in the short term and a positive effect in the long term, which unifies the ‘Porter Hypothesis’ (PH) and the ‘Costly Regulation Hypothesis’ (CRH) on the temporal dimension. Mechanism analysis reveals that ER negatively affects current FP of highly polluting firms by improving their green innovation investment. In addition, ER has a significant positive lagged effect on the FP of polluting firms by improving their operating efficiency, rather than reducing production costs. Furthermore, we find that ER significantly improves the FP of highly polluting firms, especially state-owned firms, as opposed to mildly polluting firms and privately-owned firms. The conclusions imply that government should make subsidies for green firms or firms going green, and firms should pay more attention to green innovation investment and green development.

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Section: The Effect Of Er On Fp Of Firmsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Investigating the ‘Short Pain’ and ‘Long Gain’ Effect of Environmental Regulation on Financial Performance: Evidence from Chinese Listed Polluting Firms

Liu

Dong

et al. 2022

Sustainability

View full text Add to dashboard Cite

show abstract

“…Therefore, we cannot use the statistical measure to test the validity of IV. As an alternative method, we try to test the direct effect of our IV on inno according to the mediation method (Sobel, 1982; Feng et al, 2019；Fu, 2020；Fu & Jian, 2021; Fu, 2021).

{inno}_{it} goodbreak= α_{0} goodbreak+ α_{1} \ln {instu}_{it} goodbreak+ β_{1} italicIV goodbreak+ \sum α_{j} X_{jit} goodbreak+ v_{i} goodbreak+ u_{t} goodbreak+ ε_{it}

If the coefficient on IV is significant in Equation , the imperfect exogeneity assumption of IV is violated; otherwise, our IV estimates are robust to the imperfect exogeneity (Conley et al, 2012; Nunn & Wantchekon, 2011).…”

Section: Resultsmentioning

confidence: 99%

Can international students help enhance China's urban innovation?

Wei

Yao

2022

Manage Decis Econ

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The growing number of international students coming to China has injected new vitality into the development of an innovative economy in the mainland. In this paper, we employ a panel fixed‐effect model to examine how international students affect China's technological innovation. Our paper finds that international students in China have significantly promoted urban innovation in China, reflected not only in the expansion of urban innovation scale but also in the improvement of the urban patent structure and innovation quality. This highlights the need to increase the scale of international education and improve the quality of international education.

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“…In developing countries, the Porter effect is not common, but corruption is the key factor determining this effect. Taking China as an example, in regions where enterprises spend a lot on bribery and have a high degree of corruption, environmental regulation has a significant positive impact on enterprise innovation (Fu and Jian 2021 ). At the same time, De Santis et al ( 2021 ) verified the strong Porter hypothesis based on the environmental policies of 18 OECD countries and used hourly data to represent productivity, proving that the environmental regulation policies of OECD countries have a positive effect on productivity, especially in developed countries with information and communication technology.…”

Section: Literature Review and Theory Developmentmentioning

confidence: 99%

Can environmental protection policies promote regional innovation efficiency: a difference-in-differences approach with continuous treatment

Tang

Bao

2022

Environ Sci Pollut Res

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Environmental regulation and innovative development are essential means to solve the negative externalities of environmental pollution. However, developing countries often face the dual pressures of environmental pollution and innovative development. This paper focuses on whether environmental protection policies ( EPP ) can achieve a win–win situation between green development and innovative development. Based on the panel data of 277 cities in China from 2006 to 2016, this paper studies the impact of China’s EPP on urban innovation efficiency by using a time-varying difference-in-differences approach. Combined with the geographical features of Chinese cities, we further take urban form into the mediating effect analysis. The results show that (1) EPP has a significant positive impact on innovation efficiency, and the result satisfies the parallel trend test; (2) the robustness test shows that EPP has technological innovation and diffusion effects; and (3) the mediating effect test show that urban form has a significant mediating effect on the impact of EPP on innovation efficiency. Therefore, environmental policies should be formulated considering the differences of urban form to achieve the optimal implementation effect.

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Corruption pays off: How environmental regulations promote corporate innovation in a developing country

Cited by 89 publications

References 76 publications

Investigating the ‘Short Pain’ and ‘Long Gain’ Effect of Environmental Regulation on Financial Performance: Evidence from Chinese Listed Polluting Firms

Investigating the ‘Short Pain’ and ‘Long Gain’ Effect of Environmental Regulation on Financial Performance: Evidence from Chinese Listed Polluting Firms

Can international students help enhance China's urban innovation?

Can environmental protection policies promote regional innovation efficiency: a difference-in-differences approach with continuous treatment

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