IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v76y2025ics1544612325001813.html
   My bibliography  Save this article

Financial flexibility, organizational resilience and corporate green innovation

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325001813
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.106917?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
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Hockerts, Kai & Wüstenhagen, Rolf, 2010. "Greening Goliaths versus emerging Davids -- Theorizing about the role of incumbents and new entrants in sustainable entrepreneurship," Journal of Business Venturing, Elsevier, vol. 25(5), pages 481-492, September.
    2. Yueqi Wang & Shouming Chen & Yuanyuan Hu, 2024. "Internationalization and Organizational Resilience to COVID-19 Crisis: The Moderating Effect of Digitalization," SAGE Open, , vol. 14(1), pages 21582440241, February.
    3. Wu, Jianan & Guo, Cheng & Liu, Xiaojing & Dai, Jiapeng, 2025. "Policy-driven employment structure transformation: The role of innovation and education investment," International Review of Economics & Finance, Elsevier, vol. 98(C).
    4. Nufazil Altaf, 2024. "Working Capital Financing, Firm Performance and Financial Flexibility: Evidence from Indian Hospitality Firms," Global Business Review, International Management Institute, vol. 25(2_suppl), pages 199-210, April.
    5. Justin Tan & Mike W. Peng, 2003. "Organizational slack and firm performance during economic transitions: two studies from an emerging economy," Strategic Management Journal, Wiley Blackwell, vol. 24(13), pages 1249-1263, December.
    6. Caroline Flammer & Pratima Bansal, 2017. "Does a long-term orientation create value? Evidence from a regression discontinuity," Strategic Management Journal, Wiley Blackwell, vol. 38(9), pages 1827-1847, September.
    7. Rosa Maria Dangelico & Devashish Pujari & Pierpaolo Pontrandolfo, 2017. "Green Product Innovation in Manufacturing Firms: A Sustainability‐Oriented Dynamic Capability Perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 26(4), pages 490-506, May.
    8. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    9. Xie, Xuemei & Huo, Jiage & Zou, Hailiang, 2019. "Green process innovation, green product innovation, and corporate financial performance: A content analysis method," Journal of Business Research, Elsevier, vol. 101(C), pages 697-706.
    10. Thanh Tiep Le & Phuong Quyen Tran & Ngoc Phuong Lam & My Nguyen Le Tra & Phuong Ho Pham Uyen, 2024. "Corporate social responsibility, green innovation, environment strategy and corporate sustainable development," Operations Management Research, Springer, vol. 17(1), pages 114-134, March.
    11. Wenhao Song & Hongyan Yu, 2018. "Green Innovation Strategy and Green Innovation: The Roles of Green Creativity and Green Organizational Identity," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(2), pages 135-150, March.
    12. Dai, Jiapeng & Mehmood, Usman & Nassani, Abdelmohsen A., 2025. "Empowering sustainability through energy efficiency, green innovations, and the sharing economy: Insights from G7 economies," Energy, Elsevier, vol. 318(C).
    13. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    14. Dai, Jiapeng, 2025. "Is policy pilot a viable path to sustainable development? Attention allocation perspective," International Review of Financial Analysis, Elsevier, vol. 98(C).
    15. Haroon ur Rashid Khan & Waqas Bin Khidmat & Sadia Awan, 2021. "Board diversity, financial flexibility and corporate innovation: evidence from China," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 303-326, June.
    16. Liu, Xiaoxi & Yuan, Xiaoling & Ge, Xing & Jin, Zhongguo, 2024. "Adaptation and innovation: How does climate vulnerability shapes corporate green innovation in BRICS," International Review of Financial Analysis, Elsevier, vol. 94(C).
    17. Jordi Surroca & Josep A. Tribó & Sandra Waddock, 2010. "Corporate responsibility and financial performance: the role of intangible resources," Strategic Management Journal, Wiley Blackwell, vol. 31(5), pages 463-490, May.
    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. 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.
    2. Wang, Shanshan & Wang, Shugang & Cheng, Yiqian, 2025. "How do heterogeneous green financial policy tools affect pollution emission reduction of enterprises?," Finance Research Letters, Elsevier, vol. 77(C).

    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. Xing, Manjiang & Gong, Chi & Moon, Gyu-Hyen & Ge, Xiaohong, 2025. "Digital economy, dual innovation capability and enterprise labor productivity," International Review of Financial Analysis, Elsevier, vol. 101(C).
    2. Li, Junjun & Wu, Tong & Hu, Boqiang & Pan, Dongliang & Zhou, Yaqiong, 2025. "Artificial intelligence and corporate ESG performance," International Review of Financial Analysis, Elsevier, vol. 102(C).
    3. Pereira, Vijay & Nair, Asha KS. & Bhattacharyya, Som Sekhar, 2025. "Exploring and investigating the complementarity and multidimensionality of innovation for sustainability research: Past present and future," Technovation, Elsevier, vol. 139(C).
    4. Achi, Awele & Adeola, Ogechi & Achi, Francis Chukwuedo, 2022. "CSR and green process innovation as antecedents of micro, small, and medium enterprise performance: Moderating role of perceived environmental volatility," Journal of Business Research, Elsevier, vol. 139(C), pages 771-781.
    5. Tang, Meihuan, 2025. "Data element utilization and firm value," International Review of Financial Analysis, Elsevier, vol. 102(C).
    6. Yan, Nan & Xue, Yuhang & Xu, Menghan & Sun, Yige & Yang, Yun, 2025. "Sentiment tendency of ESG coverage, public concern, and corporate environmental performance," Finance Research Letters, Elsevier, vol. 76(C).
    7. Bu, Wei & Yan, Zhongyi & Yang, Shuning, 2025. "Digital economy and corporate sustainability: Mediating roles of green innovation and risk-taking," Finance Research Letters, Elsevier, vol. 78(C).
    8. Khoa T. Tran & Phuong V. Nguyen & Linh M. Nguyen, 2018. "The Role of Financial Slack, Employee Creative Self-Efficacy and Learning Orientation in Innovation and Organizational Performance," Administrative Sciences, MDPI, vol. 8(4), pages 1-32, December.
    9. Xiaoyang Xu & Muhammad Imran & Muhammad Ayaz & Sonia Lohana, 2022. "The Mediating Role of Green Technology Innovation with Corporate Social Responsibility, Firm Financial, and Environmental Performance: The Case of Chinese Manufacturing Industries," Sustainability, MDPI, vol. 14(24), pages 1-20, December.
    10. Liu, Yuanyang & Tian, Xuemei & Long, Yang, 2025. "Digital economy and corporate ESG performance: Cost reduction or efficiency improvement?," Finance Research Letters, Elsevier, vol. 77(C).
    11. Meiwen, Su & Ming, Ji & Mengyu, Li, 2025. "Education, technology and high-quality economic development," International Review of Financial Analysis, Elsevier, vol. 102(C).
    12. Samuel Adomako & Nguyen Phong Nguyen, 2023. "Green creativity, responsible innovation, and product innovation performance: A study of entrepreneurial firms in an emerging economy," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4413-4425, November.
    13. Li, Pengcheng & Chen, Yanbing & Guo, Xiaochuan, 2025. "Digital transformation and supply chain resilience," International Review of Economics & Finance, Elsevier, vol. 99(C).
    14. Wang, Zhenzhen & Jia, Junting, 2025. "Digital transformation and organizational resilience," Finance Research Letters, Elsevier, vol. 78(C).
    15. Valero-Gil, Jesus & Surroca, Jordi A. & Tribo, Josep A. & Gutierrez, Leopoldo & Montiel, Ivan, 2023. "Innovation vs. standardization: The conjoint effects of eco-innovation and environmental management systems on environmental performance," Research Policy, Elsevier, vol. 52(4).
    16. Lee, Min-Jae & Kim, Yanghee & Roh, Taewoo, 2024. "Exploring the role of digital servitization for green innovation: Absorptive capacity, transformative capacity, and environmental strategy," Technological Forecasting and Social Change, Elsevier, vol. 207(C).
    17. Jalilvand, Abol & Kim, Sung Min, 2013. "Matching slack resources and investment strategies to achieve long-term performance: New perspectives on corporate adaptability," The Journal of Economic Asymmetries, Elsevier, vol. 10(1), pages 38-52.
    18. Liu, Qiong & Wang, Hairong, 2025. "Digital transformation, innovation capability, and ESG performance," Finance Research Letters, Elsevier, vol. 78(C).
    19. Michael Greiner & Jing Sun, 2021. "How corporate social responsibility can incentivize top managers: A commitment to sustainability as an agency intervention," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1360-1375, July.
    20. Afris Widya-Hasuti & Abbas Mardani & Dalia Streimikiene & Ali Sharifara & Fausto Cavallaro, 2018. "The Role of Process Innovation between Firm-Specific Capabilities and Sustainable Innovation in SMEs: Empirical Evidence from Indonesia," Sustainability, MDPI, vol. 10(7), pages 1-26, June.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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:eee:finlet:v:76:y:2025:i:c:s1544612325001813. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    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.