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Does Business Group Matter for the Relationship between Green Innovation and Financial Performance? Evidence from Chinese Listed Companies

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  • Qiang Xu

    (School of Management, Zhejiang University of Technology, Hangzhou 310023, China)

  • Lian Xu

    (School of Management, Zhejiang University of Technology, Hangzhou 310023, China)

  • Zaiyang Xie

    (School of Management, Zhejiang University of Technology, Hangzhou 310023, China)

  • Mufan Jin

    (School of Management, Zhejiang University of Technology, Hangzhou 310023, China)

Abstract

Green innovation has been an important approach for firms to achieve sustainable development in recent years; however, empirical studies on the relationship between green innovation and corporate performance have delivered mixed results. In particular, business groups (BG), which are a critical organizational form in many economies and are proven to have unique advantages for conducting green innovation, have attracted less scholarly attention. Therefore, in this study, we adopt the perspective of a business group and investigate how green innovation by BG-affiliated firms affects their financial performance, and we also explore the moderating effect of BG’s internal supply chain partnership. Based on a sample of 202 listed manufacturing enterprises in China from 2013 and 2017, the research results show that green innovation significantly improves the financial performance of firms, and this positive effect is more prominent in BG-affiliated firms than in non-BG firms. Further research found that BG-affiliated firms’ supply chain (suppliers and customers) concentration and trust positively moderate the relationship between green innovation and financial performance. This research concerns the particularity of business groups’ green innovation practices in China, which not only contributes to the research on the effect of BG’s green innovation on corporate performance in an emerging market context but also deepens our understanding of the role of its internal supply chain partnership from the perspective of concentration and trust.

Suggested Citation

  • Qiang Xu & Lian Xu & Zaiyang Xie & Mufan Jin, 2021. "Does Business Group Matter for the Relationship between Green Innovation and Financial Performance? Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 13(23), pages 1-16, November.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:23:p:13204-:d:690453
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    References listed on IDEAS

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    Cited by:

    1. Yung-Fu Huang & Abbott Po-Shun Chen & Manh-Hoang Do & Jen-Chieh Chung, 2022. "Assessing the Barriers of Green Innovation Implementation: Evidence from the Vietnamese Manufacturing Sector," Sustainability, MDPI, vol. 14(8), pages 1-14, April.
    2. Min Zhang & Yu Su & Peng Zhu, 2022. "Will Green Innovation Bring about the Financial Spillover Effect? Evidence from China’s High-Carbon Listed Companies," Sustainability, MDPI, vol. 15(1), pages 1-20, December.

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