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Quality or Quantity? The Impact of Voluntary Environmental Regulation on Firm’s Green Technological Innovation: Evidence from Green Factory Certification in China

Author

Listed:
  • Yongjun Chen

    (School of Business, Xiangtan University, Xiangtan 411105, China)

  • Wei Li

    (School of Business, Xiangtan University, Xiangtan 411105, China)

  • Longji Zeng

    (School of Business, Hunan University of Science and Technology, Xiangtan 411201, China)

  • Min Chen

    (School of Business, Sichuan University, Chengdu 610064, China)

Abstract

Adequately incentivizing firms to implement green technological innovation (GTI) is pivotal to achieving sustainable development. Green factory certification, a prominent example of voluntary environmental regulation, has garnered significant attention in both theoretical and policy concerns regarding its impact on green technological innovation. Leveraging green factory certification as a quasi-natural experiment, this paper utilizes a multi-timepoint difference-in-differences (DID) approach to systematically investigate its influence on firms’ green technological innovation. The findings reveal several important insights. (1) Green factory certification significantly enhances firms’ green technological innovation capabilities, facilitating substantial enhancements in both the quantity and quality of green technological innovation. (2) Mechanism analysis indicates that green factory certification promotes green innovation via three key channels—promoting the digitalization level, strengthening ESG practices, and facilitating financing constraints. (3) The green innovation incentive effects of green factory certification are particularly pronounced among firms in the eastern region, non-state-owned entities, and those exhibiting lower pollution levels. These findings underscore the critical role of green certification systems in fostering corporate green development, offering both theoretical insights and practical guidance for firms undergoing green transformation while contributing to the broader goal of sustainable development.

Suggested Citation

  • Yongjun Chen & Wei Li & Longji Zeng & Min Chen, 2025. "Quality or Quantity? The Impact of Voluntary Environmental Regulation on Firm’s Green Technological Innovation: Evidence from Green Factory Certification in China," Sustainability, MDPI, vol. 17(6), pages 1-31, March.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:6:p:2498-:d:1610761
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    References listed on IDEAS

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