The Impact of an Enterprise’s Technological Innovation Capability on Its Energy Intensity: A Comparative Analysis of Manufacturing Enterprises in China and India

Reducing energy intensity is a critical measure for promoting sustainable industrial development and achieving high-quality economic growth. Based on enterprise survey data provided by the World Bank from 2011 to 2013, this paper empirically examines the impact and underlying mechanisms of technological innovation capability on the energy intensity of manufacturing enterprises in China and India. The study finds that an improvement in an enterprise’s technological innovation capability can significantly reduce its energy intensity. Specifically, when an enterprise’s technological innovation capability increases from the 25th to the 75th percentile of its distribution, its energy intensity decreases by an average of 11.22%. This conclusion remains robust after a series of robustness checks. Heterogeneity analysis reveals that the energy-saving effect of technological innovation is significant only in the Chinese sample, but not in the Indian sample. Furthermore, this effect is more pronounced in larger, more capital-intensive enterprises. Further mechanism analysis indicates that improvements in production efficiency and enhancements in operational flexibility are effective mediating channels through which technological innovation reduces energy intensity. This study provides micro-level evidence for the theoretical proposition of a green transition driven by technological innovation in the context of emerging markets. It also offers policy implications for China and India to formulate differentiated energy conservation and emission reduction policies and to promote the green upgrading of their manufacturing sectors.