IDEAS home Printed from https://ideas.repec.org/a/gam/jijerp/v17y2020i20p7680-d432333.html

Impacts of Environmental Regulation on the Green Transformation and Upgrading of Manufacturing Enterprises

Author

Listed:
  • Liang Shen

    (School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China)

  • Runjie Fan

    (School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China)

  • Yuyan Wang

    (School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China)

  • Zhaoqing Yu

    (School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China)

  • Rongyun Tang

    (Department of Industrial and System Engineering, University of Tennessee, Knoxville, TN 37996, USA)

Abstract

Since environmental problems are becoming increasingly prominent, macro policies and social development have placed higher requirements on manufacturing enterprises to promote green transformation and upgrading (GTU) in China. Considering that different manufacturing enterprises choose different green technology innovation levels for GTU under environmental regulation, a game model between manufacturing enterprises and the government is constructed. The relationship between the green technology innovation level (GTIL) and the environmental regulation intensity is analyzed. Through numerical examples, the influences of environmental regulation and consumer preference on system decisions are further examined. Moreover, an econometric model is constructed to explore the influence that the environmental regulation exerts on the GTIL using panel data from the Chinese manufacturing industry. Our results show that the increase in environmental regulation intensity contributes to improving GTIL and promoting the GTU of manufacturing enterprises. Furthermore, as the environmental regulation is enhanced, the sales price decreases, benefiting consumers. Consumers’ preference for high-GTIL products is conducive to GTU under environmental regulation. Empirical analysis shows that there is a U-shaped relationship between environmental regulation and the GTIL. Only when the intensity reaches a threshold can the environmental regulation be beneficial to improve the GTIL and promote the GTU of Chinese manufacturing enterprises.

Suggested Citation

  • Liang Shen & Runjie Fan & Yuyan Wang & Zhaoqing Yu & Rongyun Tang, 2020. "Impacts of Environmental Regulation on the Green Transformation and Upgrading of Manufacturing Enterprises," IJERPH, MDPI, vol. 17(20), pages 1-14, October.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:20:p:7680-:d:432333
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1660-4601/17/20/7680/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1660-4601/17/20/7680/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tone, Kaoru & Sahoo, Biresh K., 2003. "Scale, indivisibilities and production function in data envelopment analysis," International Journal of Production Economics, Elsevier, vol. 84(2), pages 165-192, May.
    2. Jiangfeng Hu & Zhao Wang & Yuehan Lian & Qinghua Huang, 2018. "Environmental Regulation, Foreign Direct Investment and Green Technological Progress—Evidence from Chinese Manufacturing Industries," IJERPH, MDPI, vol. 15(2), pages 1-14, January.
    3. Yenipazarli, Arda, 2017. "To collaborate or not to collaborate: Prompting upstream eco-efficient innovation in a supply chain," European Journal of Operational Research, Elsevier, vol. 260(2), pages 571-587.
    4. Yang, Chih-Hai & Tseng, Yu-Hsuan & Chen, Chiang-Ping, 2012. "Environmental regulations, induced R&D, and productivity: Evidence from Taiwan's manufacturing industries," Resource and Energy Economics, Elsevier, vol. 34(4), pages 514-532.
    5. Manuel Frondel & Jens Horbach & Klaus Rennings, 2007. "End‐of‐pipe or cleaner production? An empirical comparison of environmental innovation decisions across OECD countries," Business Strategy and the Environment, Wiley Blackwell, vol. 16(8), pages 571-584, December.
    6. Albort-Morant, Gema & Leal-Millán, Antonio & Cepeda-Carrión, Gabriel, 2016. "The antecedents of green innovation performance: A model of learning and capabilities," Journal of Business Research, Elsevier, vol. 69(11), pages 4912-4917.
    7. Özdemir, Öznur & Denizel, Meltem & Guide, V. Daniel R., 2012. "Recovery decisions of a producer in a legislative disposal fee environment," European Journal of Operational Research, Elsevier, vol. 216(2), pages 293-300.
    8. Genc, Talat S. & De Giovanni, Pietro, 2020. "Closed-loop supply chain games with innovation-led lean programs and sustainability," International Journal of Production Economics, Elsevier, vol. 219(C), pages 440-456.
    9. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    10. Pargal, Sheoli & Wheeler, David, 1996. "Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1314-1327, December.
    11. Ghisetti, Claudia & Quatraro, Francesco, 2017. "Green Technologies and Environmental Productivity: A Cross-sectoral Analysis of Direct and Indirect Effects in Italian Regions," Ecological Economics, Elsevier, vol. 132(C), pages 1-13.
    12. Maxime C. Cohen & Ruben Lobel & Georgia Perakis, 2016. "The Impact of Demand Uncertainty on Consumer Subsidies for Green Technology Adoption," Management Science, INFORMS, vol. 62(5), pages 1235-1258, May.
    13. Jia Xu & Jiuchang Wei & Haipeng (Allan) Chen, 2019. "Strategic responses of stigmatized Chinese manufacturing firms to formal and informal environmental regulative pressures through enhanced corporate social responsibility effort," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1235-1260, November.
    14. K. Sridhar Moorthy, 1988. "Product and Price Competition in a Duopoly," Marketing Science, INFORMS, vol. 7(2), pages 141-168.
    15. Xiguang Cao & Min Deng & Fei Song & Shihu Zhong & Junhao Zhu, 2019. "Direct and moderating effects of environmental regulation intensity on enterprise technological innovation: The case of China," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-20, October.
    16. Chen, Jen-Yi & Dimitrov, Stanko & Pun, Hubert, 2019. "The impact of government subsidy on supply Chains’ sustainability innovation," Omega, Elsevier, vol. 86(C), pages 42-58.
    17. Palmer, Karen & Walls, Margaret, 1997. "Optimal policies for solid waste disposal Taxes, subsidies, and standards," Journal of Public Economics, Elsevier, vol. 65(2), pages 193-205, August.
    18. Xu, Xiaoping & He, Ping & Xu, Hao & Zhang, Quanpeng, 2017. "Supply chain coordination with green technology under cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 433-442.
    Full references (including those not matched with items on IDEAS)

    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. Xie, Rong-hui & Yuan, Yi-jun & Huang, Jing-jing, 2017. "Different Types of Environmental Regulations and Heterogeneous Influence on “Green” Productivity: Evidence from China," Ecological Economics, Elsevier, vol. 132(C), pages 104-112.
    2. Antonietti,Roberto & Marzucchi,Alberto, 2013. "Green investment strategies and export performance: A firm-level investigation," INGENIO (CSIC-UPV) Working Paper Series 201302, INGENIO (CSIC-UPV).
    3. Cong Wang & Zongbao Zou & Shidao Geng, 2021. "Green Technology Investment in a Decentralized Supply Chain under Demand Uncertainty," Sustainability, MDPI, vol. 13(7), pages 1-25, March.
    4. Muyao Li & Jinsong Zhang & Ramakrishnan Ramanathan & Ruiqian Li, 2020. "Opening the Black Box: The Impacts of Environmental Regulations on Technological Innovation," IJERPH, MDPI, vol. 17(12), pages 1-18, June.
    5. Lorena D’Agostino, 2015. "How MNEs respond to environmental regulation: integrating the Porter hypothesis and the pollution haven hypothesis," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(2), pages 245-269, August.
    6. Li Liu & Zhe Wang & Jiangtao Xu & Zaisheng Zhang, 2023. "Green baton: how government interventions advance green technological innovation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11121-11152, October.
    7. Chanyuan Liu & Long Xin & Jinye Li & Huaping Sun, 2022. "The Impact of Renewable Energy Technology Innovation on Industrial Green Transformation and Upgrading: Beggar Thy Neighbor or Benefiting Thy Neighbor," Sustainability, MDPI, vol. 14(18), pages 1-28, September.
    8. Wu, Qianni & Chiu, Chun-Hung, 2023. "The impacts of carbon insurance on supply chain and environment considering technology risk under cap-and-trade mechanism," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    9. Truong, Yann & Berrone, Pascual, 2022. "Can environmental innovation be a conventional source of higher market valuation?," Journal of Business Research, Elsevier, vol. 142(C), pages 113-121.
    10. Tifang Ye & Hao Zheng & Xiangyu Ge & Keling Yang, 2021. "Pathway of Green Development of Yangtze River Economics Belt from the Perspective of Green Technological Innovation and Environmental Regulation," IJERPH, MDPI, vol. 18(19), pages 1-26, October.
    11. Xinyu Wang & Yuanze Chai & Wensen Wu & Adnan Khurshid, 2023. "The Empirical Analysis of Environmental Regulation’s Spatial Spillover Effects on Green Technology Innovation in China," IJERPH, MDPI, vol. 20(2), pages 1-14, January.
    12. Roberto Antonietti & Alberto Marzucchi, 2013. "Environmental investments and firms' productivity: a closer look," SEEDS Working Papers 0114, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jan 2014.
    13. Chen, Jen-Yi & Dimitrov, Stanko & Pun, Hubert, 2019. "The impact of government subsidy on supply Chains’ sustainability innovation," Omega, Elsevier, vol. 86(C), pages 42-58.
    14. Jin, Wei & Yang, Jun & Wang, Chengfu, 2024. "Cost subsidy or environmental regulation? The effects of government interventions on environmental quality and 3BL performance," International Journal of Production Economics, Elsevier, vol. 270(C).
    15. Antonietti, Roberto & Marzucchi, Alberto, 2014. "Green tangible investment strategies and export performance: A firm-level investigation," Ecological Economics, Elsevier, vol. 108(C), pages 150-161.
    16. Francesco Nicolli & Francesco Vona & Lionel Nesta, 2012. "Determinants of Renewable Energy Innovation: Environmental Policies vs. Market Regulation," Working Papers 201204, University of Ferrara, Department of Economics.
    17. Jintao Zhang & Zhen Yang & Li Meng & Lu Han, 2022. "Environmental regulations and enterprises innovation performance: the role of R&D investments and political connections," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 4088-4109, March.
    18. Jiang, Yong & Klein, Tony & Ren, Yi-Shuai & Xiong, Yuan-Kun, 2026. "Green innovation in the face of external uncertainty: Insights from US climate policies," Energy Economics, Elsevier, vol. 153(C).
    19. Yu, Yanan & He, Yong & Zhao, Xuan, 2021. "Impact of demand information sharing on organic farming adoption: An evolutionary game approach," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    20. Xia, Jing & Zheng, Yan & Yang, Lehe & Xiao, Yujie, 2024. "Government intervention in green technology innovation: The carrot, the stick or both?," Technological Forecasting and Social Change, Elsevier, vol. 200(C).

    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:gam:jijerp:v:17:y:2020:i:20:p:7680-:d:432333. 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: MDPI Indexing Manager The email address of this maintainer does not seem to be valid anymore. Please ask MDPI Indexing Manager to update the entry or send us the correct address (email available below). General contact details of provider: https://www.mdpi.com .

    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.