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The Connection between Absorptive Capacity and Green Innovation: The Function of Board Capital and Environmental Regulation

Author

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  • Sohail Ahmad Javeed

    (Management School, Hunan City University, Yiyang 413000, China)

  • Boon Heng Teh

    (Faculty of Management, Multimedia University, Persiaran Multimedia, Cyberjaya 63100, Malaysia)

  • Tze San Ong

    (School of Business and Economics, Universiti Putra, Serdang 43400, Malaysia
    Department of Business Administration, Daffodil International University, Dhaka 1341, Bangladesh)

  • Nguyen Thi Phuong Lan

    (Faculty of Management, Multimedia University, Persiaran Multimedia, Cyberjaya 63100, Malaysia)

  • Saravanan Muthaiyah

    (Faculty of Management, Multimedia University, Persiaran Multimedia, Cyberjaya 63100, Malaysia)

  • Rashid Latief

    (School of Finance, Xuzhou University of Technology, Xuzhou 221018, China)

Abstract

The stress of environmental regulations, sustainable development objectives, and global warming is becoming more prominent now. Most studies conclude that the industrial sector is largely at fault and under tremendous pressure to address these climate change issues. This study highlights the significance of green innovation to Chinese firms in mitigating these conservational challenges, and the study probes the association between green innovation and absorptive capacity. Additionally, board capital (the social and human capital of directors) and environmental regulation—both drivers of green innovation—are explored as moderators between green innovation and absorptive capacity. With appropriate econometric methods and theoretical support from the natural resource-based review, the resource dependency theory, and the Porter hypothesis, the results indicate the positive relationship between green innovation and absorptive capacity. They also reveal board capital and environmental regulation as positive moderators, emphasizing their significance to green innovation. This study offers several suggestions and directives for stakeholders, such as businesses, policymakers, and governments, to foster green innovation for greater profitability, minimizing negative industrial consequences.

Suggested Citation

  • Sohail Ahmad Javeed & Boon Heng Teh & Tze San Ong & Nguyen Thi Phuong Lan & Saravanan Muthaiyah & Rashid Latief, 2023. "The Connection between Absorptive Capacity and Green Innovation: The Function of Board Capital and Environmental Regulation," IJERPH, MDPI, vol. 20(4), pages 1-20, February.
    • Handle: RePEc:gam:jijerp:v:20:y:2023:i:4:p:3119-:d:1064275
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    References listed on IDEAS

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