Regional Integrity and Corporate Green-Technology Innovation: Evidence from Deadbeat Borrowers in China

Corporate green-technology innovation (GTI), an inevitable choice for sustainable development in China and the world, has attracted widespread attention in academic circles. However, prior studies have ignored the critical impact of informal institutions on GTI. The present study introduces the concept of regional integrity, as an important informal institution. It analyzes whether, how, and the extent to which levels of regional integrity can influence GTI in firms. Based on data derived from people known to have defaulted on orders issued by the Supreme People’s Court and green patent-licensing data from listed companies between 2013 and 2020, we show that a decline in regional integrity levels can significantly inhibit GTI. We use instrumental-variable method to overcome a potential endogeneity problem; after a series of robustness tests, the conclusions remain valid. Further analysis shows that lower levels of regional integrity can hinder corporate GTI by reducing the willingness of firms to disclose environmental information and diminishing the impact of environmental regulations. We also find that, for firms whose directors and general managers do not hold concurrent posts, state-owned firms, and utility patents, lower levels of regional integrity have a more significant inhibitory effect on GTI.