IDEAS home Printed from https://ideas.repec.org/a/eee/teinso/v68y2022ics0160791x22000458.html
   My bibliography  Save this article

Strategic or substantive innovation? -The impact of institutional investors' site visits on green innovation evidence from China

Author

Listed:
  • Jiang, Li
  • Bai, Yu

Abstract

Green innovation is a critical path for enterprises to improve their sustainable development level. As an important external force of corporate governance, institutional investors may play a role in promoting green innovation. This study analyzes the direct effect of institutional investors on green innovation and the moderating effect of firm size, and empirically verifies it with the data from 957 Chinese manufacturing enterprises from 2012 to 2019. We find that institutional investors' site visits are positively correlated with the level of green innovation, and that firm size positively moderates this relationship. Further, this study finds that site visits by pressure-sensitive institutional investors will only induce enterprises to cater to investors and carry out strategic green innovation, while pressure-resistant institutional investors will promote enterprises to carry out substantial green innovation. In additional analysis results, we find that the promotion effect of site visit on green innovation is more significant in enterprises with dual CEO positions and in low-competitive market environment.

Suggested Citation

  • Jiang, Li & Bai, Yu, 2022. "Strategic or substantive innovation? -The impact of institutional investors' site visits on green innovation evidence from China," Technology in Society, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:teinso:v:68:y:2022:i:c:s0160791x22000458
    DOI: 10.1016/j.techsoc.2022.101904
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0160791X22000458
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techsoc.2022.101904?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Messeni Petruzzelli, Antonio & Ardito, Lorenzo & Savino, Tommaso, 2018. "Maturity of knowledge inputs and innovation value: The moderating effect of firm age and size," Journal of Business Research, Elsevier, vol. 86(C), pages 190-201.
    2. Claude Francoeur & Faten Lakhal & Safa Gaaya & Itidel Ben Saad, 2021. "How do powerful CEOs influence corporate environmental performance?," Post-Print hal-03562646, HAL.
    3. Yuan, Xiaodong & Li, Xiaotao, 2021. "Mapping the technology diffusion of battery electric vehicle based on patent analysis: A perspective of global innovation systems," Energy, Elsevier, vol. 222(C).
    4. Francoeur, Claude & Lakhal, Faten & Gaaya, Safa & Ben Saad, Itidel, 2021. "How do powerful CEOs influence corporate environmental performance?," Economic Modelling, Elsevier, vol. 94(C), pages 121-129.
    5. Belev, Boyan, 2003. "Institutional investors in Bulgarian corporate governance reform: obstacles or facilitators?," Journal of World Business, Elsevier, vol. 38(4), pages 361-374, November.
    6. Park, Byung Il & Ghauri, Pervez N., 2015. "Determinants influencing CSR practices in small and medium sized MNE subsidiaries: A stakeholder perspective," Journal of World Business, Elsevier, vol. 50(1), pages 192-204.
    7. Xie, Xuemei & Huo, Jiage & Zou, Hailiang, 2019. "Green process innovation, green product innovation, and corporate financial performance: A content analysis method," Journal of Business Research, Elsevier, vol. 101(C), pages 697-706.
    8. Lou, Kuo-Ren & Lu, Yang-Kai & Shiu, Cheng-Yi, 2020. "Monitoring role of institutional investors and acquisition performance: Evidence from East Asian markets," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    9. Wiesmeth, Hans, 2020. "Stakeholder engagement for environmental innovations," Journal of Business Research, Elsevier, vol. 119(C), pages 310-320.
    10. Huang, Emily J., 2015. "The role of institutional investors and individual investors in financial markets: Evidence from closed-end funds," Review of Financial Economics, Elsevier, vol. 26(C), pages 1-11.
    11. Jiang, Xuanyu & Yuan, Qingbo, 2018. "Institutional investors' corporate site visits and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 148-168.
    12. Gao, Shenghao & Cao, Feng & Liu, Xiangqiang, 2017. "Seeing is not necessarily the truth: Do institutional investors' corporate site visits reduce hosting firms' stock price crash risk?," International Review of Economics & Finance, Elsevier, vol. 52(C), pages 165-187.
    13. Shaffer, Sherrill & Spierdijk, Laura, 2020. "Measuring multi-product banks’ market power using the Lerner index," Journal of Banking & Finance, Elsevier, vol. 117(C).
    14. Edward Freeman, R. & Phillips, Robert A., 2002. "Stakeholder Theory: A Libertarian Defense," Business Ethics Quarterly, Cambridge University Press, vol. 12(3), pages 331-349, July.
    15. Yu, Chin-Hsien & Wu, Xiuqin & Zhang, Dayong & Chen, Shi & Zhao, Jinsong, 2021. "Demand for green finance: Resolving financing constraints on green innovation in China," Energy Policy, Elsevier, vol. 153(C).
    16. Guo, Di & Guo, Yan & Jiang, Kun, 2016. "Government-subsidized R&D and firm innovation: Evidence from China," Research Policy, Elsevier, vol. 45(6), pages 1129-1144.
    17. Gao, Kaijuan & Shen, Hanxiao & Gao, Xi & Chan, Kam C., 2019. "The power of sharing: Evidence from institutional investor cross-ownership and corporate innovation," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 284-296.
    18. Borochin, Paul & Yang, Jie, 2017. "The effects of institutional investor objectives on firm valuation and governance," Journal of Financial Economics, Elsevier, vol. 126(1), pages 171-199.
    19. Brickley, James A. & Lease, Ronald C. & Smith, Clifford Jr., 1988. "Ownership structure and voting on antitakeover amendments," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 267-291, January.
    20. Ma, Ding & Yu, Qian & Li, Jing & Ge, Mengni, 2021. "Innovation diffusion enabler or barrier: An investigation of international patenting based on temporal exponential random graph models," Technology in Society, Elsevier, vol. 64(C).
    21. Emily J. Huang, 2015. "The role of institutional investors and individual investors in financial markets: Evidence from closed‐end funds," Review of Financial Economics, John Wiley & Sons, vol. 26(1), pages 1-11, September.
    22. Kim, Incheol & Miller, Steve & Wan, Hong & Wang, Bin, 2016. "Drivers behind the monitoring effectiveness of global institutional investors: Evidence from earnings management," Journal of Corporate Finance, Elsevier, vol. 40(C), pages 24-46.
    23. Liao, Wenbin & Du, Jianing & Sun, Ping-Wen, 2020. "Heterogeneous institutional preferences and informativeness: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 60(C).
    24. Kong, Dongmin & Zhu, Ling & Yang, Zhiqing, 2020. "Effects of foreign investors on energy firms' innovation: Evidence from a natural experiment in China," Energy Economics, Elsevier, vol. 92(C).
    25. Zhou, Min & Govindan, Kannan & Xie, Xiongbiao & Yan, Liang, 2021. "How to drive green innovation in China's mining enterprises? Under the perspective of environmental legitimacy and green absorptive capacity," Resources Policy, Elsevier, vol. 72(C).
    26. Panicker, Vidya Sukumara & Mitra, Sumit & Upadhyayula, Rajesh Srinivas, 2019. "Institutional investors and international investments in emerging economy firms: A behavioral risk perspective," Journal of World Business, Elsevier, vol. 54(4), pages 322-334.
    27. Hu, Guoqiang & Wang, Xiaoqi & Wang, Yu, 2021. "Can the green credit policy stimulate green innovation in heavily polluting enterprises? Evidence from a quasi-natural experiment in China," Energy Economics, Elsevier, vol. 98(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen Hu & Yanan Li & Penghao Ye, 2023. "The Halo Effect of Government: Does State-Owned Capital Promote the Green Innovation of Chinese Private Enterprises?," Sustainability, MDPI, vol. 15(11), pages 1-21, May.
    2. Jiang, Yahan & Wang, Cai & Li, Sha & Wan, Jing, 2022. "Do institutional investors' corporate site visits improve ESG performance? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 76(C).
    3. Shi, Xuanyi & Lin, Yongjia & Wang, Yizhi, 2024. "Institutional investor heterogeneity and green innovation in China: Does digital transformation matter?," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 994-1014.
    4. Qin, Shufeng & Xiong, Yongqing, 2022. "Innovation strategies of Chinese new energy vehicle enterprises under the influence of non-financial policies: Effects, mechanisms and implications," Energy Policy, Elsevier, vol. 164(C).
    5. Wang, Zhen & Tang, Pei, 2024. "Substantive digital innovation or symbolic digital innovation: Which type of digital innovation is more conducive to corporate ESG performance?," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 1212-1228.
    6. 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.
    7. Xiao, Zhongyi & Chen, Haitao & Chen, Kang, 2023. "How does institutional investors' information acquisition inhibit share pledging? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).
    8. Xiaohui Wu & Yumin Li & Chong Feng, 2023. "Green innovation peer effects in common institutional ownership networks," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 641-660, March.
    9. Zhengke Du & Chengcheng Zhu & Yuxin Zhou, 2022. "Increasing Quantity or Improving Quality: Can Soil Pollution Control Promote Green Innovation in China’s Industrial and Mining Enterprises?," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    10. Heying Liu & Chan Lyu, 2022. "Can ESG Ratings Stimulate Corporate Green Innovation? Evidence from China," Sustainability, MDPI, vol. 14(19), pages 1-20, September.
    11. 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.
    12. Fu, Tong & Li, Zijun & Qiu, Zhaoxuan & Tong, Xinle, 2024. "The policy gap between finance and economy: Evidence from China's green finance policy," Energy Economics, Elsevier, vol. 134(C).
    13. Wang, Jun, 2023. "The impact of investor communication on enterprise green innovation," Finance Research Letters, Elsevier, vol. 57(C).
    14. Ren, Xingzi & Dong, Yizhe & Guo, Jie Michael & Liu, Yaodong, 2023. "Institutional ownership and corporate greenhouse gas emissions: The evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    15. Gao, Kang & Yuan, Yijun, 2022. "Government intervention, spillover effect and urban innovation performance: Empirical evidence from national innovative city pilot policy in China," Technology in Society, Elsevier, vol. 70(C).
    16. Hu, Yi & Jin, Shuchang & Ni, Juan & Peng, Kai & Zhang, Lei, 2023. "Strategic or substantive green innovation: How do non-green firms respond to green credit policy?," Economic Modelling, Elsevier, vol. 126(C).
    17. Liao, Zhongju & Chen, Jie & Chen, Xueli & Song, Malin, 2024. "Digital platform capability, environmental innovation quality, and firms’ competitive advantage: The moderating role of environmental uncertainty," International Journal of Production Economics, Elsevier, vol. 268(C).
    18. Hussain, Jafar & Lee, Chien-Chiang & Hu, Danting, 2023. "Maximizing load capacity factor through a carbon-neutral environment via a simulation of carbon peak," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 746-764.
    19. Linghu, Jingying & Guo, Chengcheng, 2024. "Digital government: The new player in improving mining companies’ environmental performance?," Resources Policy, Elsevier, vol. 93(C).
    20. Zhang, Zhihe & Hou, Yufei & Li, Zixuan & Li, Mulin, 2024. "From symbolic to substantive green innovation: How does ESG ratings optimize corporate green innovation structure," Finance Research Letters, Elsevier, vol. 63(C).
    21. Haidong Li & Ziming Qian & Shanyong Wang & Jing Wang & Qian Wang, 2023. "Do green concerns promote corporate green innovation? Evidence from Chinese stock exchange interactive platforms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1786-1801, April.
    22. Liu, Liqian & Feng, Amei & Liu, Mingxia, 2024. "The effect of green innovation on corporate financial performance: Does quality matter?," Finance Research Letters, Elsevier, vol. 62(PB).
    23. Tian, Jinfang & Sun, Siyang & Cao, Wei & Bu, Di & Xue, Rui, 2024. "Make every dollar count: The impact of green credit regulation on corporate green investment efficiency," Energy Economics, Elsevier, vol. 130(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhou, Taiyun & Liu, Mingxuan & Zhang, Xiyu & Qi, Zheng & Qin, Ni, 2024. "Does institutional ownership affect corporate social responsibility? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 84-98.
    2. Xiao, Zhongyi & Chen, Haitao & Chen, Kang, 2023. "How does institutional investors' information acquisition inhibit share pledging? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 89(C).
    3. Dongying Du & Xiaojian Tang & Huaiming Wang & Joseph H. Zhang & Stephanie Tsui & Dongjie Lin, 2022. "CEO organizational identification and corporate innovation investment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(3), pages 4185-4217, September.
    4. Chen, Wen, 2023. "Bank connections, corporate social responsibility and low-carbon innovation," Energy Policy, Elsevier, vol. 183(C).
    5. Xu, Jia & Zeng, Shu & Qi, Shaozhou & Cui, Jingbo, 2023. "Do institutional investors facilitate corporate environmental innovation?," Energy Economics, Elsevier, vol. 117(C).
    6. Panicker, Vidya Sukumara & Upadhyayula, Rajesh Srinivas & Sivakumar, Sandeep, 2022. "Internationalization of hybrid state-owned enterprises from emerging markets: Institutional investors as enablers," Journal of Business Research, Elsevier, vol. 151(C), pages 409-422.
    7. Kałdoński, Michał & Jewartowski, Tomasz & Mizerka, Jacek, 2020. "Capital market pressure, real earnings management, and institutional ownership stability - Evidence from Poland," International Review of Financial Analysis, Elsevier, vol. 71(C).
    8. Yuan, Baolong & Cao, Xueyun, 2022. "Do corporate social responsibility practices contribute to green innovation? The mediating role of green dynamic capability," Technology in Society, Elsevier, vol. 68(C).
    9. Hanyuan Liang & Guangliang Li & Weikun Zhang & Zhe Chen, 2022. "The Impact of Green Innovation on Enterprise Performance: The Regulatory Role of Government Grants," Sustainability, MDPI, vol. 14(20), pages 1-17, October.
    10. Qi, Zhen & Chu, Chien-Chi & Zhou, Yixiao & Chen, Jian, 2022. "Corporate site visits and firm performance," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 598-608.
    11. Daquan Gao & Christina W. Y. Wong & Kee-hung Lai, 2023. "Development of Ecosystem for Corporate Green Innovation: Resource Dependency Theory Perspective," Sustainability, MDPI, vol. 15(6), pages 1-28, March.
    12. Zhang, Han & Li, Minghui & Yang, Yujie, 2024. "Does common institutional ownership constrain related party transactions? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 1015-1042.
    13. Yanwei Lyu & Yangyang Bai & Jinning Zhang, 2024. "Green finance policy and enterprise green development: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 414-432, January.
    14. Yang, Xia & Ma, Zhong, 2022. "Institutional investors’ corporate site visits and dividend payouts," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 697-716.
    15. Zhang, Zuomin & Wu, Yingjue & Wang, Honglei, 2024. "Corporate financial fragility, R&D investment, and corporate green innovation: Evidence from China," Finance Research Letters, Elsevier, vol. 62(PB).
    16. Dasgupta, Amil & Fos, Vyacheslav & Sautner, Zacharias, 2021. "Institutional investors and corporate governance," LSE Research Online Documents on Economics 112114, London School of Economics and Political Science, LSE Library.
    17. He Xiao, 2023. "Institutional investors' corporate site visits and corporate investment efficiency," International Review of Finance, International Review of Finance Ltd., vol. 23(2), pages 359-392, June.
    18. Minhang Deng & Yunyi Wang & Gaoliang Tian & Bozhi Xu & Yuyan Tang, 2023. "Institutional investors' corporate site visits and resource extraction: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(5), pages 5211-5243, December.
    19. Jianyu Zhao & Jing Qu & Lei Wang, 2023. "Heterogeneous institutional investors, environmental information disclosure and debt financing pressure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(1), pages 253-296, March.
    20. Liping Wang & Zhijia Wang & Lili Tian & Chuang Li, 2022. "Evolutionary Game and Numerical Simulation of Enterprises’ Green Technology Innovation: Based on the Credit Sales Financing Service of Supply Chain," Sustainability, MDPI, vol. 15(1), pages 1-25, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:teinso:v:68:y:2022:i:c:s0160791x22000458. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/technology-in-society .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.