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Does Institutional Opening‐Up Enhance Corporate Green Innovation? Evidence From China's Pilot Free Trade Zones

Author

Listed:
  • Kai Sun
  • Xin Zhong
  • Ding Xiong

Abstract

To explore the role of institutional opening‐up in promoting green technology innovation in enterprises, this study uses data from A‐share listed companies in China from 2011 to 2023. Employing a multi‐period DID model, we systematically investigate the impact of the establishment of Pilot Free Trade Zones (FTZ) on corporate green technology innovation. The results show that FTZ establishment significantly improves the level of green patent applications by enterprises, particularly exerting a more prominent positive incentive effect on green invention patents, which represent higher technological content and R&D quality. Dynamic effect analysis reveals the cumulative nature of the policy impact over time, with the effect increasing over time. Moderation analysis shows that administrative approval efficiency and public environmental demands play a significant positive moderating role between FTZ establishment and corporate green innovation. The former enhances enterprises' enthusiasm and confidence in green R&D by shortening the patent authorization process and strengthening the protection of innovative achievements, while the latter “forces” enterprises to increase their willingness to invest in environmental protection through social supervision and public opinion pressure, forming a synergistic effect with institutional opening‐up. Heterogeneity analysis reveals significant differences in policy responsiveness among different entities: non‐digital economy enterprises show a stronger policy response than digital economy enterprises, peripheral cities show a stronger response than central cities, and non‐old industrial base cities show a stronger response than old industrial base cities. Furthermore, FTZs not only promote independent R&D by enterprises but also significantly enhance the output of green patents under collaborative R&D models, indicating that institutional opening‐up provides diversified innovation pathways for enterprises. This study provides new empirical evidence for understanding the intrinsic link between institutional opening‐up and green technology innovation and has important reference value for promoting the optimization of the institutional environment, the improvement of administrative efficiency, and the design of green innovation policies with the participation of multiple stakeholders.

Suggested Citation

  • Kai Sun & Xin Zhong & Ding Xiong, 2025. "Does Institutional Opening‐Up Enhance Corporate Green Innovation? Evidence From China's Pilot Free Trade Zones," American Journal of Economics and Sociology, Wiley Blackwell, vol. 84(5), pages 823-840, November.
    • Handle: RePEc:bla:ajecsc:v:84:y:2025:i:5:p:823-840
    DOI: 10.1111/ajes.12633
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    References listed on IDEAS

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    1. Feng Peng & Mengke Hu, 2026. "How Does Market Demand Incentivize Green Innovation in Resource‐Based Industries? Evidence From China," American Journal of Economics and Sociology, Wiley Blackwell, vol. 85(1), pages 113-127, January.

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