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How Political Ties and Green Innovation Co-evolve in China: Alignment with Institutional Development and Environmental Pollution

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Abstract

Building on the co-evolutionary perspective, this study investigates the reciprocal and co-evolving relationship between political ties and green innovation in the presence of institutional and environmental changes. Using panel data for Chinese listed private firms for a sample period that runs from 2013 through 2016, our findings indicate that political ties have an overall positive impact on green innovation. Moreover, political ties and green innovation mutually reinforce each other in less developed regions or heavily polluted areas; however, green innovation discourages the formation of political ties in regions with high levels of institutional development or less environmental pollution. These findings provide novel insights into the co-evolution of and co-alignment between political strategy, green innovation, institutions, and environments in emerging economies.

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Notes

  1. http://www.mee.gov.cn/gkml/sthjbgw/qt/201404/t20140417_270670.htm.

  2. https://datacatalog.worldbank.org/dataset/world-development-indicators.

  3. We use the program package “psmatch2” based on the Stata 16 SE version.

  4. We are not able to test the effect of regional environmental pollution (Hypothesis 3a and 3b) in this robustness test because data on environmental pollution for any time before 2013 are not available.

  5. According to prior studies (Du et al., 2014; Li and Lu 2016), “polluting industries” include mining and washing of coal, extraction of petroleum and natural gas, mining and processing of ferrous and non-ferrous metal, mining and processing of non-metal, food and beverages, textiles, pulp-paper-printing, petroleum processing, coking and nuclear fuel processing, chemical raw materials and product manufacturing, medicine and biological product manufacturing, chemical fiber manufacturing, and rubber and plastic products.

  6. Principal component analysis (PCA) is widely used as a method for constructing a composite index with highly correlated indicators (Callahan et al., 2003). In our study, the Pearson correlation values of NO2, SO2, CO and CO2 range from .489 to .655.

  7. We conduct five interviews with senior managers by phone and each interview lasts about half an hour. We choose senior managers from firms located in cities with different levels of institutional development and environmental pollution. We first ask senior managers some background information about their firms, particularly what kinds of green initiatives their firms have adopted or implemented. Then we invite senior managers to explain their opinions on the relationship between political ties and green innovation based on their actual experience.

  8. For example, the Ministry of Environmental Protection (renamed the Ministry of Ecology and Environment in 2018) issued Industry Directory for Environmental Inspection on Listed Firms [No. 373 (2008)] in 2008 (http://www.mee.gov.cn/gkml/hbb/bgth/200910/t20091022_174891.htm).

    The Shenzhen Stock Exchange issued The guidelines on Social Responsibility of Listed Companies in 2006 (http://www.szse.cn/disclosure/notice/general/t20060925_499697.html).

    The Shanghai Stock Exchange issued The guidelines on Environmental Information Disclosure of Listed Companies in 2008 (http://www.sse.com.cn/lawandrules/sserules/listing/stock/c/c_20150912_3985851.shtml).

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Acknowledgements

We would like to thank the special issue Editors and three anonymous reviewers for their constructive suggestions throughout the review process. This study was supported by the General Research Fund from the Research Grants Council, Hong Kong SAR Government (Project No. HKU 17501219) and the National Natural Science Foundation of China (Nos. 72072149, 72032007, 71972159).

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  1. School of Management, Xiamen University, Xiamen, China

    Wei Jiang

  2. Business School, Southwest University of Political Science and Law, Chongqing, China

    Kui Wang

  3. Faculty of Business and Economics, The University of Hong Kong, Pokfulam, Hong Kong

    Kevin Zheng Zhou

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Appendix

Appendix

See Tables 6, 7, 8 and Fig. 3.

Table 6 Measurements
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Table 7 Descriptive and correlation statistics (before matching, N = 2705)
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Table 8 Propensity-score matching result (logit estimation)
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Fig. 3
figure 3

Density function before and after-matching

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Jiang, W., Wang, K. & Zhou, K.Z. How Political Ties and Green Innovation Co-evolve in China: Alignment with Institutional Development and Environmental Pollution. J Bus Ethics 186, 739–760 (2023). https://doi.org/10.1007/s10551-023-05434-9

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