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Are fiscal policy incentives effective in stimulating firms' eco‐product innovation? The moderating role of dynamic capabilities

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  • Siying Long
  • Zhongju Liao

Abstract

This study investigates the effectiveness of fiscal policy incentives—in particular, direct subsidies and tax credits—in stimulating eco‐product innovation among Chinese manufacturing firms. We also examine the moderating effects of dynamic capabilities. The empirical results, which are based on survey data from 265 firms in China, demonstrate that both direct subsidies and tax credits are conducive to firms' eco‐product innovation. In addition, we find that when firms' dynamic integration capabilities are strong, the facilitating effects of direct subsidies and tax credits on eco‐product innovation are likewise strong. Moreover, dynamic reconfiguration capabilities positively moderate the relationship between tax credits and eco‐product innovation. By identifying moderators that influence the effect of fiscal incentives on eco‐product innovation in heterogeneous firms, this study contributes to fiscal policy debates and realizing sustainable development.

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  • Siying Long & Zhongju Liao, 2021. "Are fiscal policy incentives effective in stimulating firms' eco‐product innovation? The moderating role of dynamic capabilities," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3095-3104, November.
    • Handle: RePEc:bla:bstrat:v:30:y:2021:i:7:p:3095-3104
    DOI: 10.1002/bse.2791
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    3. Yuan, Baolong & Cao, Xueyun, 2022. "Do corporate social responsibility practices contribute to green innovation? The mediating role of green dynamic capability," Technology in Society, Elsevier, vol. 68(C).
    4. Larbi-Siaw, Otu & Xuhua, Hu & Owusu, Ebenezer & Owusu-Agyeman, Abigail & Fulgence, Brou Ettien & Frimpong, Samuel Akwasi, 2022. "Eco-innovation, sustainable business performance and market turbulence moderation in emerging economies," Technology in Society, Elsevier, vol. 68(C).
    5. Youjia Li & Yi Li & Shunli Qiu, 2023. "Analysis on the Effectiveness and Mechanisms of Public Policies to Promote Innovation of High-Tech Startups in Makerspaces," Sustainability, MDPI, vol. 15(9), pages 1-22, April.
    6. Siying Long & Zhongju Liao, 2023. "Green relational capital, integration capabilities and environmental innovation adoption: The moderating role of normative pressures," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1570-1580, June.
    7. Deng, Yawen & Ng Tsan Sheng, Adam & Xu, Jiuping, 2023. "Authority-enterprise equilibrium based mixed subsidy mechanism for the value-added treatment of food waste," Energy, Elsevier, vol. 282(C).
    8. Zhunxin Huang & Zengrui Xiao, 2023. "Dynamic Capabilities, Environmental Management Capabilities, Stakeholder Pressure and Eco-Innovation of Chinese Manufacturing Firms: A Moderated Mediation Model," Sustainability, MDPI, vol. 15(9), pages 1-22, May.
    9. Jakeline Serrano‐García & Andrea Bikfalvi & Josep Llach & Juan José Arbeláez‐Toro, 2022. "Capabilities and organisational dimensions conducive to green product innovation: Evidence from Croatian and Spanish manufacturing firms," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 2767-2785, November.
    10. Han, Myat Su & Ma, Shuang (Sara) & Wang, Yonggui & Tian, Qinghong, 2023. "Impact of technology-enabled product eco-innovation: Empirical evidence from the Chinese manufacturing industry," Technovation, Elsevier, vol. 128(C).
    11. Hanyuan Liang & Guangliang Li & Weikun Zhang & Zhe Chen, 2022. "The Impact of Green Innovation on Enterprise Performance: The Regulatory Role of Government Grants," Sustainability, MDPI, vol. 14(20), pages 1-17, October.

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