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Does green corporate investment crowd out other business investment?

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  • John P Weche

Abstract

Empirical studies on the link between green investment and other business investment at the firm level either focus on innovation-specific types of investment or fail to consider the simultaneity of investment decisions. The analysis to be presented here offers a broad focus on different types of environmental protection investment (EPI) and explicitly considers simultaneity issues, using newly created panel data for German manufacturing firms. Germany is an ideal case for testing the crowding-out hypothesis, due to its high level of environmental regulation and a significant presence of command-and-control style measures, which are especially under debate as a source of crowding-out. The estimation of a behavioral investment model supports a crowding-out of other business investment through EPI in general as well as its subcategories of add-on measures and investments in renewable energy, whereby add-on measures bear the greatest potential for a deterioration of productivity.

Suggested Citation

  • John P Weche, 2019. "Does green corporate investment crowd out other business investment?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(5), pages 1279-1295.
    • Handle: RePEc:oup:indcch:v:28:y:2019:i:5:p:1279-1295.
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    File URL: http://hdl.handle.net/10.1093/icc/dty056
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    Citations

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    Cited by:

    1. Dongdong Li & Chenxuan Shang, 2022. "When does environmental innovation crowd out process innovation? A dynamic analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2275-2283, September.
    2. Pan, Xianyou & Shen, Zhiyang & Song, Malin & Shu, Yalin, 2023. "Enhancing green technology innovation through enterprise environmental governance: A life cycle perspective with moderator analysis of dynamic innovation capability," Energy Policy, Elsevier, vol. 182(C).
    3. Zhang, Dongyang, 2023. "Can environmental monitoring power transition curb corporate greenwashing behavior?," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 199-218.
    4. Ge-zhi Wu & Da-ming You, 2021. ""Stabilizer" or "catalyst"? How green technology innovation affects the risk of stock price crashes: an analysis based on the quantity and quality of patents," Papers 2106.16177, arXiv.org, revised Aug 2021.
    5. Yue Tang & Xueliang Tang & Hong Shen, 2023. "The Relationship between Subjective Status and Corporate Environmental Governance: Evidence from Private Firms in China," Sustainability, MDPI, vol. 15(11), pages 1-22, May.

    More about this item

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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