IDEAS home Printed from https://ideas.repec.org/a/bla/ajecsc/v84y2025i5p823-840.html

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
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ajes.12633
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ajes.12633?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Daqing Yao & John Whalley, 2015. "The Yuan and Shanghai Pilot Free Trade Zone," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 30(4), pages 591-615.
    2. Gustavo Manso, 2011. "Motivating Innovation," Journal of Finance, American Finance Association, vol. 66(5), pages 1823-1860, October.
    3. Magali A. Delmas & Maria J. Montes‐Sancho, 2010. "Voluntary agreements to improve environmental quality: symbolic and substantive cooperation," Strategic Management Journal, Wiley Blackwell, vol. 31(6), pages 575-601, June.
    4. Magali Delmas & Michael W. Toffel, 2004. "Stakeholders and environmental management practices: an institutional framework," Business Strategy and the Environment, Wiley Blackwell, vol. 13(4), pages 209-222, July.
    5. David H. Hsu & Rosemarie H. Ziedonis, 2013. "Resources as dual sources of advantage: Implications for valuing entrepreneurial‐firm patents," Strategic Management Journal, Wiley Blackwell, vol. 34(7), pages 761-781, July.
    6. Rosa Dangelico & Devashish Pujari, 2010. "Mainstreaming Green Product Innovation: Why and How Companies Integrate Environmental Sustainability," Journal of Business Ethics, Springer, vol. 95(3), pages 471-486, September.
    7. Mingyi Wang & Yiqun Sun, 2024. "Digital economy, servitization, and enterprise emission reduction—evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(10), pages 24861-24885, October.
    8. Feng, Wei & Sun, Shujun & Yuan, Hang, 2023. "Research on the efficiency of factor allocation in the pilot free trade zones," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 727-745.
    9. Hao Chen & Bo Yuan & Qi Cui, 2021. "Does the pilot free trade zone policy attract the entering of foreign-invested enterprises? The evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 28(14), pages 1162-1168, August.
    10. Li, Ziwei & Wang, Xingyu & Wu, Zhuang, 2024. "Can green finance reform and innovation policies promote corporate carbon performance?," Finance Research Letters, Elsevier, vol. 62(PB).
    11. Daqing Yao & John Whalley, 2015. "An Evaluation of the Impact of the China (Shanghai) Pilot Free Trade Zone (SPFTZ)," NBER Working Papers 20901, National Bureau of Economic Research, Inc.
    12. Jiang, Yufan & Wang, Hongyan & Liu, Zuankuo, 2021. "The impact of the free trade zone on green total factor productivity ——evidence from the shanghai pilot free trade zone," Energy Policy, Elsevier, vol. 148(PB).
    13. Li, Chengyou & Zheng, Chunji & Liu, Mengxun & Wang, Zeru, 2024. "Digital economy spillover on energy saving and emission reduction: Evidence from China," Energy, Elsevier, vol. 308(C).
    14. Guan, Chenghua & Huang, Jinyuan & Jiang, Ruyue & Xu, Wanting, 2023. "The impact of pilot free trade zone on service industry structure upgrading," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 472-491.
    15. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
    16. Qi Dong & Yuriy Bilan, 2024. "Effect of Free Trade Area Policy on Innovation Capability in the Service Industry," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 26(66), pages 589-589, Aprilie.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zou, Tao & Li, Shasha & Dai, Yixin, 2025. "Does the pilot free trade zone promote “quality improvement and quantity increase” of the city’s export trade?," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1323-1341.
    2. Zeng, Jing & Zhang, Bingqian & Li, Kevin K., 2024. "The impact of free trade zones on ESG performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1110-1122.
    3. Pan, An & Cao, Xuekang, 2024. "Pilot free trade zones and low-carbon innovation: Evidence from listed companies in China," Energy Economics, Elsevier, vol. 136(C).
    4. Feng, Wei & Sun, Shujun & Yuan, Hang, 2023. "Research on the efficiency of factor allocation in the pilot free trade zones," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 727-745.
    5. Wenqi Jing & Yi Zheng & Xiuqing Shen, 2024. "Does the establishment of Pilot Free Trade Zones promote international expansion of enterprises? Quasi-natural experimental evidence from China," PLOS ONE, Public Library of Science, vol. 19(8), pages 1-22, August.
    6. Qingshan Ma & Yuanmeng Zhang & Kexin Yang & Lingyun He, 2021. "Have China’s Pilot Free Trade Zones Improved Green Total Factor Productivity?," IJERPH, MDPI, vol. 18(21), pages 1-20, November.
    7. Xu, Shiteng & Shen, Ronghua & Zhang, Yahua & Cai, Yifei, 2024. "Fostering regional innovation efficiency through pilot free trade zones: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 356-367.
    8. Kai Sun & Xin Zhong & Ding Xiong, 2026. "The Impact of Cross‐Border E‐Commerce on Urban Entrepreneurial Activity: Evidence From Cross‐Border E‐Commerce Comprehensive Pilot Zones," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 47(3), pages 670-687, April.
    9. Yuan Feng & Ying Li & Changfei Nie, 2023. "The Effect of Place-Based Policy on Urban Land Green Use Efficiency: Evidence from the Pilot Free-Trade Zone Establishment in China," Land, MDPI, vol. 12(3), pages 1-19, March.
    10. Bei Wang & Hong Chen & Ruiqi Chen & Weiting Zeng & Lechuan Ye, 2023. "Does the Green Development of Cities Need High-Level Opening Up? A Quasi-Natural Experiment Based on China’s Pilot Free Trade Zone," Sustainability, MDPI, vol. 15(7), pages 1-20, March.
    11. Yan, Xiaolei & He, Taiyi & Qian, Pengcheng & Liu, Zhongwen, 2024. "Does the construction of Pilot Free Trade Zones promote the development of green economy? - A quasi-natural experiment evidence from China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 208-224.
    12. Ross Levine & Chen Lin & Lai Wei, 2017. "Insider Trading and Innovation," Journal of Law and Economics, University of Chicago Press, vol. 60(4), pages 749-800.
    13. Li, Zhaohua & Pang, Suqin & Zhu, Zhiyun, 2024. "The impact of pilot free trade zones on entrepreneurship: Evidence from a quasi-natural experiment in China," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).
    14. Shanqing Liu & Shaolong Wang & Huwei Wen & Congxian He & Huan Liu, 2024. "Public support policies and entrepreneurship in less-developed areas: a study of China’s revolutionary base areas," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-29, August.
    15. Wang, Yang & Zhang, Kexin, 2025. "Industrial and financial cooperation, heterogeneous green technological innovation, and urban low carbon transformation," International Review of Economics & Finance, Elsevier, vol. 102(C).
    16. Lixiang Wang & Weian Li & Lujun Qi, 2020. "Stakeholder Pressures and Corporate Environmental Strategies: A Meta-Analysis," Sustainability, MDPI, vol. 12(3), pages 1-16, February.
    17. Guo, Qingbin & Zhong, Jinrong, 2022. "The effect of urban innovation performance of smart city construction policies: Evaluate by using a multiple period difference-in-differences model," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    18. Qiang Liu & Lianchao Yu & Guowan Yan & Yu Guo, 2023. "External governance pressure and corporate environmental responsibility: Evidence from a quasi‐natural experiment in China," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 32(1), pages 74-93, January.
    19. Eduardo Duque‐Grisales & Javier Aguilera‐Caracuel & Jaime Guerrero‐Villegas & Encarnación García‐Sánchez, 2020. "Does green innovation affect the financial performance of Multilatinas? The moderating role of ISO 14001 and R&D investment," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3286-3302, December.
    20. Yu, Ellen Pei-yi & Luu, Bac Van & Chen, Catherine Huirong, 2020. "Greenwashing in environmental, social and governance disclosures," Research in International Business and Finance, Elsevier, vol. 52(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ajecsc:v:84:y:2025:i:5:p:823-840. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0002-9246 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.