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How do government R&D subsidies affect corporate green innovation choices? Perspectives from strategic and substantive innovation

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  • Zhao, Shikuan
  • Abbassi, Wajih
  • Hunjra, Ahmed Imran
  • Zhang, Han

Abstract

Green innovation (GI) plays a crucial role in enhancing corporate market competitiveness and environmental responsibility, but the influence of government subsidies on GI remains uncertain. Based on panel data from 1214 Chinese listed companies between 2007 and 2019, this paper explores the impact of government R&D subsidies (GRS) on corporate strategic green innovation (Str GI) and substantive green innovation (Sub GI), as well as the moderating effect of government environmental attention (GEA) and corporate profitability (CP). The results show that GRS has a positive effect on Str GI, while it has an inverted “U-shaped” relationship with Sub GI. The effect of GRS on GI manifests itself differently across different marketization levels, industry characteristics, and corporate ownership. Further research shows that GEA and CP have a negative moderating effect on the relationship between GRS and Str GI while having a positive moderating effect on the relationship between GRS and Sub GI. The findings of this paper provide practical insights for the government to formulate relevant R&D subsidy policies and to promote corporate GI.

Suggested Citation

  • Zhao, Shikuan & Abbassi, Wajih & Hunjra, Ahmed Imran & Zhang, Han, 2024. "How do government R&D subsidies affect corporate green innovation choices? Perspectives from strategic and substantive innovation," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 1378-1396.
    • Handle: RePEc:eee:reveco:v:93:y:2024:i:pa:p:1378-1396
    DOI: 10.1016/j.iref.2024.04.014
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