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Financial flexibility, organizational resilience and corporate green innovation

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  • Wang, Linjing
  • Zhao, Chunyan
  • Gan, Yufei
  • Ni, Xiaoxiao

Abstract

Understanding the drivers of corporate environmental innovation has become increasingly vital as ecological concerns intensify. While existing research explores various determinants, the complex relationship between financial flexibility and environmental innovation in emerging economies warrants deeper investigation. This study examines how financial flexibility influences green innovation in Chinese listed companies, considering both organizational resilience as a moderator and organizational characteristics as boundary conditions. Through analysis of 26,539 firm-year observations spanning 2008–2022, we employ fixed-effects models and address endogeneity concerns to reveal several key findings. Our results demonstrate that financial flexibility significantly enhances green innovation outcomes, with this relationship strengthened by organizational resilience. Notably, this effect varies substantially across organizational contexts, showing stronger impact in state-owned enterprises and during growth phases of organizational development. These findings indicate that financially adaptable firms demonstrate greater propensity for environmental innovation, particularly when possessing strong adaptive capabilities and supportive institutional structures. By illuminating these contextual variations, our study advances understanding of corporate environmental strategies and provides targeted insights for promoting green innovation across different organizational settings in rapidly industrializing economies.

Suggested Citation

  • Wang, Linjing & Zhao, Chunyan & Gan, Yufei & Ni, Xiaoxiao, 2025. "Financial flexibility, organizational resilience and corporate green innovation," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001813
    DOI: 10.1016/j.frl.2025.106917
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    2. Hong Ji & Xin Zeng & Fengxiu Zhou, 2025. "Intelligent Manufacturing and Green Innovation Efficiency: Perspective on the Agglomeration Effect," Sustainability, MDPI, vol. 17(11), pages 1-27, May.
    3. Cui, Ke & Liu, Tianjing & Wu, Yunyong & Ding, Lina, 2025. "Information barrier, audit quality, and organizational resilience," Finance Research Letters, Elsevier, vol. 85(PB).
    4. Zhang, Wan & Zhang, Yuyao & Mou, Suitao, 2025. "Green finance development on corporate sustainability: Evidence from china," Finance Research Letters, Elsevier, vol. 82(C).
    5. Fang Ling & Hongxian Zhen & Chao Wang & Jingyi Li & Jingjing Zhao, 2025. "Environmental protection strategic alliance and enterprise green innovation," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-16, December.
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    7. Yahui Chen & Yi An & Zixun Nie & Yuanying Chi & Xinyue Jia, 2025. "Impact of Green Financial Reform on Urban Economic Resilience—A Quasi-Natural Experiment Based on Green Financial Reform and Innovation Pilot Zones," Sustainability, MDPI, vol. 17(15), pages 1-32, July.
    8. Xiong, Zhiqiao & Liu, Jianjiang & Shi, Daqian & Hu, Jin, 2025. "From chains to gains: How green supply chain management drives green innovation in Chinese manufacturing," International Review of Financial Analysis, Elsevier, vol. 107(C).
    9. Chen, Ping & Yao, Xiaoyang & Li, Jianfeng & Wang, Ya, 2025. "Does the transition finance policy facilitate lending for heavy polluters? Insights from China," Finance Research Letters, Elsevier, vol. 83(C).
    10. Di Wang & Mingliang Li & Rong Kong & Yan Hong, 2025. "The impact of financial resilience on farmers’ entrepreneurial decision-making," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-10, December.

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