Research on the green innovation promoted by environmental vertical management reform: evidence from green patents of Chinese listed companies

The environmental vertical management reform (EVMR) below the provincial level in China is an important driving force for enterprise green innovation. This article employs a progressive double-difference method to test the green innovation performance of enterprises in pilot areas relative to non-pilot areas before and after the implementation of the reform, to analyse its impact on green innovation. The findings of the article indicate that: (1) EVMR can significantly promote enterprise green innovation. This conclusion still holds after controlling for endogeneity and conducting other robustness tests. (2) In terms of the mechanism, EVMR primarily promotes green innovation by improving the supervisory capacity of provincial-level environmental protection departments, the enforcement capacity of grassroots environmental protection departments, and the incentives and supervision for managers from shareholders in enterprises. (3) Heterogeneity results show that the EVMR has a more significant promoting effect on enterprise green innovation in regions with lower degree of marketization and less emphasis on the environment.

Automated summary

This study finds that the environmental vertical management reform below the provincial level in China significantly promotes enterprise green innovation. The reform improves the supervisory and enforcement capacity of provincial and grassroots environmental protection departments, as well as incentives and supervision for managers from shareholders, thus driving green innovation. Additionally, the reform has a more significant effect on enterprise green innovation in regions with lower degree of marketization and less emphasis on the environment.