IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i23p10242-d1527419.html
   My bibliography  Save this article

Does Carbon Emission Trading Affect China’s Green Innovation? An Exploration from the Perspective of the Enterprise Lifecycle

Author

Listed:
  • Cuiyun Gao

    (School of Finance and Trade, Faculty of Economics, Liaoning University, Shenyang 110136, China)

  • Xin Li

    (School of Finance and Trade, Faculty of Economics, Liaoning University, Shenyang 110136, China)

  • Junjie Hou

    (School of Finance and Trade, Faculty of Economics, Liaoning University, Shenyang 110136, China)

Abstract

At different lifecycle stages, enterprises possess differentiated resource endowments and innovation needs, leading to variations in the effect of carbon emission trading policies on their green innovation. This study analyzes the impact of China’s carbon emission trading policy on green innovation, using A-share listed firms in Shanghai and Shenzhen between 2010 and 2022 as samples, from the perspective of the enterprise lifecycle. The results validate the Porter hypothesis, showing that the policy stimulates green innovation, especially in the growth and maturity stages of enterprises. However, the extent of this impact varies across enterprise scale heterogeneity, heterogeneity in the proportion of independent directors, heterogeneity in the level of green innovation and regional heterogeneity. The carbon emission trading policies can mitigate financing constraints and improve capital investment to foster green innovation, especially for mature enterprises. The findings not only enhance the theoretical investigation of flexible market-oriented environmental regulatory mechanisms but also provide valuable insights for advancing the growth of China’s low-carbon economy.

Suggested Citation

  • Cuiyun Gao & Xin Li & Junjie Hou, 2024. "Does Carbon Emission Trading Affect China’s Green Innovation? An Exploration from the Perspective of the Enterprise Lifecycle," Sustainability, MDPI, vol. 16(23), pages 1-27, November.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:23:p:10242-:d:1527419
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/23/10242/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/23/10242/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paul Lanoie & Michel Patry & Richard Lajeunesse, 2008. "Environmental regulation and productivity: testing the porter hypothesis," Journal of Productivity Analysis, Springer, vol. 30(2), pages 121-128, October.
    2. Guo, Mengmeng & Wang, Huixin & Kuai, Yicheng, 2023. "Environmental regulation and green innovation: Evidence from heavily polluting firms in China," Finance Research Letters, Elsevier, vol. 53(C).
    3. N. Berger, Allen & F. Udell, Gregory, 1998. "The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 613-673, August.
    4. Gutiérrez, Emilio & Teshima, Kensuke, 2018. "Abatement expenditures, technology choice, and environmental performance: Evidence from firm responses to import competition in Mexico," Journal of Development Economics, Elsevier, vol. 133(C), pages 264-274.
    5. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    6. Stucki, Tobias & Woerter, Martin & Arvanitis, Spyros & Peneder, Michael & Rammer, Christian, 2018. "How different policy instruments affect green product innovation: A differentiated perspective," Energy Policy, Elsevier, vol. 114(C), pages 245-261.
    7. Danny Miller & Peter H. Friesen, 1984. "A Longitudinal Study of the Corporate Life Cycle," Management Science, INFORMS, vol. 30(10), pages 1161-1183, October.
    8. Sultanuzzaman, Md Reza & Yahya, Farzan & Lee, Chien-Chiang, 2024. "Exploring the complex interplay of green finance, business cycles, and energy development," Energy, Elsevier, vol. 306(C).
    9. Xu, Xiaofeng & Cui, Xiaodan & Chen, Xiangyu & Zhou, Yichen, 2022. "Impact of government subsidies on the innovation performance of the photovoltaic industry: Based on the moderating effect of carbon trading prices," Energy Policy, Elsevier, vol. 170(C).
    10. Wayne B. Gray & Ronald J. Shadbegian, 1998. "Environmental Regulation, Investment Timing, and Technology Choice," Journal of Industrial Economics, Wiley Blackwell, vol. 46(2), pages 235-256, June.
    11. Pan, Xianyou & Shen, Zhiyang & Song, Malin & Shu, Yalin, 2023. "Enhancing green technology innovation through enterprise environmental governance: A life cycle perspective with moderator analysis of dynamic innovation capability," Energy Policy, Elsevier, vol. 182(C).
    12. Zhang, Weiwei & Xi, Bin, 2024. "The effect of carbon emission trading on enterprises’ sustainable development performance: A quasi-natural experiment based on carbon emission trading pilot in China," Energy Policy, Elsevier, vol. 185(C).
    13. Gao, Tingfan & Wang, Shixun & Chen, Baizhu & Yang, Lihong, 2024. "The impact of big tech corporate venture capital investments on innovation: Evidence from the equity investment market," China Economic Review, Elsevier, vol. 83(C).
    14. Zhao, Ziyi & Zhao, Yuhuan & Lv, Xin & Li, Xiaoping & Zheng, Lu & Fan, Shunan & Zuo, Sumin, 2024. "Environmental regulation and green innovation: Does state ownership matter?," Energy Economics, Elsevier, vol. 136(C).
    15. repec:bla:jindec:v:46:y:1998:i:2:p:235-56 is not listed on IDEAS
    16. Yahya, Farzan & Lee, Chien-Chiang, 2023. "Disentangling the asymmetric effect of financialization on the green output gap," Energy Economics, Elsevier, vol. 125(C).
    17. Zhang, Xiaoliang & Zheng, Xiaojia, 2024. "Does carbon emission trading policy induce financialization of non-financial firms? Evidence from China," Energy Economics, Elsevier, vol. 131(C).
    18. Robert Drazin & Robert K. Kazanjian, 1990. "A reanalysis of miller and friesen's life cycle data," Strategic Management Journal, Wiley Blackwell, vol. 11(4), pages 319-325, May.
    19. Liu, Guangqiang & Yang, Zhiqing & Zhang, Fan & Zhang, Nan, 2022. "Environmental tax reform and environmental investment: A quasi-natural experiment based on China's Environmental Protection Tax Law," Energy Economics, Elsevier, vol. 109(C).
    20. DeAngelo, Harry & DeAngelo, Linda & Stulz, Rene M., 2006. "Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory," Journal of Financial Economics, Elsevier, vol. 81(2), pages 227-254, August.
    21. Ma, Dan & He, Yuhang & Zeng, Linggang, 2024. "Can green finance improve the ESG performance? Evidence from green credit policy in China," Energy Economics, Elsevier, vol. 137(C).
    22. Song, Xiang & Wang, Dingyu & Zhang, Xuantao & He, Yuan & Wang, Yong, 2022. "A comparison of the operation of China's carbon trading market and energy market and their spillover effects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    23. Gatti, Lucia & Pizzetti, Marta & Seele, Peter, 2021. "Green lies and their effect on intention to invest," Journal of Business Research, Elsevier, vol. 127(C), pages 228-240.
    24. Zhang, Yue-Jun & Wang, Ao-Dong & Tan, Weiping, 2015. "The impact of China's carbon allowance allocation rules on the product prices and emission reduction behaviors of ETS-covered enterprises," Energy Policy, Elsevier, vol. 86(C), pages 176-185.
    25. Jiangyue Joy Ying & Benjamin K. Sovacool, 2021. "A fair trade? Expert perceptions of equity, innovation, and public awareness in China’s future Emissions Trading Scheme," Climatic Change, Springer, vol. 164(3), pages 1-23, February.
    26. Michael Porter, 1994. "The Role of Location in Competition," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(1), pages 35-40.
    27. Anthony, Joseph H. & Ramesh, K., 1992. "Association between accounting performance measures and stock prices : A test of the life cycle hypothesis," Journal of Accounting and Economics, Elsevier, vol. 15(2-3), pages 203-227, August.
    28. Xu, Pei & Ye, Penghao & Zhao, Fan & Jahanger, Atif, 2024. "Technology spillover and market competitiveness in green credit induced corporate green innovation: An evolutionary game theory and empirical study," Technological Forecasting and Social Change, Elsevier, vol. 207(C).
    29. de Vries, F.P. & Withagen, C.A.A.M., 2005. "Innovation and environmental stringency : The case of sulfur dioxide abatement," Other publications TiSEM 9f3f79ab-2646-4f72-845c-4, Tilburg University, School of Economics and Management.
    30. Brunnermeier, Smita B. & Cohen, Mark A., 2003. "Determinants of environmental innovation in US manufacturing industries," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 278-293, March.
    31. Zhao, Xin & Benkraiem, Ramzi & Abedin, Mohammad Zoynul & Zhou, Silu, 2024. "The charm of green finance: Can green finance reduce corporate carbon emissions?," Energy Economics, Elsevier, vol. 134(C).
    Full references (including those not matched with items on IDEAS)

    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. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    2. Shuai Shao & Zhigao Hu & Jianhua Cao & Lili Yang & Dabo Guan, 2020. "Environmental Regulation and Enterprise Innovation: A Review," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1465-1478, March.
    3. Zhao, Ziyi & Zhao, Yuhuan & Lv, Xin & Li, Xiaoping & Zheng, Lu & Fan, Shunan & Zuo, Sumin, 2024. "Environmental regulation and green innovation: Does state ownership matter?," Energy Economics, Elsevier, vol. 136(C).
    4. Martínez-Zarzoso, Inmaculada & Bengochea-Morancho, Aurelia & Morales-Lage, Rafael, 2019. "Does environmental policy stringency foster innovation and productivity in OECD countries?," Energy Policy, Elsevier, vol. 134(C).
    5. Wang, Yan & Shen, Neng, 2016. "Environmental regulation and environmental productivity: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 758-766.
    6. Hasan, Mostafa Monzur & Cheung, Adrian (Wai-Kong), 2018. "Organization capital and firm life cycle," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 556-578.
    7. Chen, Zhongfei & Zhang, Xiao & Chen, Fanglin, 2021. "Do carbon emission trading schemes stimulate green innovation in enterprises? Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    8. Ahsan Habib & Md. Borhan Uddin Bhuiyan & Mostafa Monzur Hasan, 2018. "Firm life cycle and advisory directors," Australian Journal of Management, Australian School of Business, vol. 43(4), pages 575-592, November.
    9. Herman, Kyle S. & Xiang, Jun, 2019. "Induced innovation in clean energy technologies from foreign environmental policy stringency?," Technological Forecasting and Social Change, Elsevier, vol. 147(C), pages 198-207.
    10. Zhuanlan Sun & Demi Zhu, 2023. "Investigating environmental regulation effects on technological innovation: A meta-regression analysis," Energy & Environment, , vol. 34(3), pages 463-492, May.
    11. Mian Yang & Yining Yuan & Fuxia Yang & Dalia Patino-Echeverri, 2021. "Effects of environmental regulation on firm entry and exit and China’s industrial productivity: a new perspective on the Porter Hypothesis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 915-944, October.
    12. Shi, Beibei & Feng, Chen & Qiu, Meng & Ekeland, Anders, 2018. "Innovation suppression and migration effect: The unintentional consequences of environmental regulation," China Economic Review, Elsevier, vol. 49(C), pages 1-23.
    13. Ahsan Akbar & Minhas Akbar & Wenjin Tang & Muhammad Azeem Qureshi, 2019. "Is Bankruptcy Risk Tied to Corporate Life-Cycle? Evidence from Pakistan," Sustainability, MDPI, vol. 11(3), pages 1-22, January.
    14. Yao, Shiyue & Yu, Xueying & Yan, Sen & Wen, Shiyan, 2021. "Heterogeneous emission trading schemes and green innovation," Energy Policy, Elsevier, vol. 155(C).
    15. Hasan, Mostafa Monzur & Hossain, Mahmud & Cheung, Adrian (Wai-Kong) & Habib, Ahsan, 2015. "Corporate life cycle and cost of equity capital," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(1), pages 46-60.
    16. Habib, Ahsan & Hasan, Mostafa Monzur, 2019. "Corporate life cycle research in accounting, finance and corporate governance: A survey, and directions for future research," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 188-201.
    17. Chiara Franco & Giovanni Marin, 2017. "The Effect of Within-Sector, Upstream and Downstream Environmental Taxes on Innovation and Productivity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(2), pages 261-291, February.
    18. Minhas Akbar & Ahsan Akbar & Petra Maresova & Minghui Yang & Hafiz Muhammad Arshad, 2020. "Unraveling the Bankruptcy Risk‒Return Paradox across the Corporate Life Cycle," Sustainability, MDPI, vol. 12(9), pages 1-19, April.
    19. Zhang, Yijun & Li, Xiaoping & Song, Yi & Jiang, Feitao, 2021. "Can green industrial policy improve total factor productivity? Firm-level evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 51-62.
    20. Shu Kedong & Lu Yueyu & Yu Ziyan & Kuai Peng & Zhang Shu’an, 2021. "Influences of environmental regulations on skill premium: mediating effect of industrial structure optimization," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(2), pages 245-273, April.

    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:gam:jsusta:v:16:y:2024:i:23:p:10242-:d:1527419. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.