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The effects of external supervision on firm-level environmental innovation in China: Are they substantive or strategic?

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  • Liao, Zhongju
  • Chen, Jie
  • Weng, Chen
  • Zhu, Cunbin

Abstract

Environmental innovation is an important driving force for economic sustainable development, and external supervision plays a key role in promoting firms’ environmental behavior. However, the existing literature neglects to examine the impact of various external supervision on the environmental innovation of different categories and their underlying mechanisms. To fill this theoretical gap, we examine the influence of three types of supervision on environmental innovation and the moderating role of alertness. Selecting 344 firms as the sample and using multiple regression analysis, we find that law enforcement supervision and media supervision can promote firms’ substantive eco-innovation that aims at achieving long-term environmental technology progress, and strategic eco-innovation that pursues short-term approach to environmental development, whereas public supervision only has a positive effect on firms’ substantive eco-innovation. Further findings demonstrate that alertness can enhance the positive effect of media supervision on firms’ substantive and strategic eco-innovation.

Suggested Citation

  • Liao, Zhongju & Chen, Jie & Weng, Chen & Zhu, Cunbin, 2023. "The effects of external supervision on firm-level environmental innovation in China: Are they substantive or strategic?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 267-277.
    • Handle: RePEc:eee:ecanpo:v:80:y:2023:i:c:p:267-277
    DOI: 10.1016/j.eap.2023.08.016
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