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Can environmental regulation break the political resource curse: evidence from heavy polluting private listed companies in China

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  • Da Gao
  • Yi Li
  • Linfang Tan

Abstract

This paper aims to explore whether the over-reliance on political resources hampers corporate technological innovation and the role of environmental regulation in mitigating the adverse effect. A simplified theoretical framework is proposed to combine political ties, environmental regulations, and corporate innovation. Then, based on the data for listed private companies in China’s heavy pollution industry, our empirical results show that political relations have negative impacts on both patent licensing and R&D investment, indicating the existence of a political resource curse in listed private companies in China’s heavy pollution industry. The transmission mechanisms include mitigating market competition and inducing overinvestment, but increasing the rent-seeking motivation is not a channel through which political connections negatively affect corporate innovation. Further empirical analysis demonstrates that environmental regulations help eliminate the curse effect of political ties on technological innovation at the firm level in China, through increasing market competition and reducing overinvestment. The findings of this paper provide insights for optimizing environmental regulation policies, which are conducive to inducing technical innovation in politically connected enterprises.

Suggested Citation

  • Da Gao & Yi Li & Linfang Tan, 2024. "Can environmental regulation break the political resource curse: evidence from heavy polluting private listed companies in China," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 67(13), pages 3190-3216, November.
  • Handle: RePEc:taf:jenpmg:v:67:y:2024:i:13:p:3190-3216
    DOI: 10.1080/09640568.2023.2218988
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    Cited by:

    1. Kun Xiao & Xiaolong Chen & Hongfeng Zhang & Cora Un In Wong, 2025. "Green Economic Efficiency and Coordinated Development in the Bohai Rim Region: Addressing Regional Disparities for Sustainable Innovation and Economic Transformation," Sustainability, MDPI, vol. 17(3), pages 1-16, January.

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