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Green innovation peer effects in common institutional ownership networks

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  • Xiaohui Wu
  • Yumin Li
  • Chong Feng

Abstract

As an important breakthrough in coordinating economic, social, and ecological benefits, green innovation has received wide attention from governments, firms, and the public. However, existing studies mainly explored the economic factors influencing firms' green innovation while neglecting social factors. This study took common institutional ownership as the research perspective to explore whether firms' green innovation decisions are affected by their peers. Using a sample of Chinese A‐share listed firms from 2003 to 2019, this paper found that firms imitate their peers' green innovation in common institutional ownership networks and exhibit green innovation peer effects. Mechanism testing revealed that “voting with hands” through common institutional ownership helps firms obtain green innovation information (information‐based imitation), while “voting with feet” through common institutional ownership helps firms maintain a competitive awareness of green innovation (rivalry‐based imitation), thereby contributing to green innovation peer effects in common institutional ownership networks. Heterogeneity analysis showed that firms with greater financing constraints and lower levels of risk‐taking are more likely to imitate their peers' green innovation. Moreover, firms only regard peers with similar industry status and identical property rights as imitation targets in common institutional ownership networks, thereby following “the imitation law of closer preference.” An analysis of economic consequences revealed that green innovation peer effects in common institutional ownership networks are not strategic behaviors of “quantity over quality,” with imitation contributing to improving firm value. This paper enriches existing research on the influencing factors of green innovation and provides a new reference for promoting sustainable development.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:corsem:v:30:y:2023:i:2:p:641-660
    DOI: 10.1002/csr.2379
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    2. Wang, Ailun & Hu, Shuo & Zhu, Mei & Wu, Mingxuan, 2024. "Customer contagion effects of voluntary environmental regulation: A supplier green innovation perspective," Energy Economics, Elsevier, vol. 132(C).
    3. Ruichen Ma, 2023. "The sustainable development trend in environmental, social, and governance issues and stakeholder engagement: Evidence from mergers and acquisitions in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3159-3173, November.
    4. Juzhang Feng & Sha Tang & Junhao Zhong, 2024. "Can corporate environmental, social, and governance performance influence foreign institutional investors to hold shares? Evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4310-4330, July.
    5. Shuai Jin & Na Qiao & Muhamad Aamir Shafique Khan & Changchun Zhu, 2024. "Promoting the production and consumption of green products from the perspective of supply and demand: An evolutionary game-based analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(9), pages 23193-23213, September.
    6. Yang, Zhonghai & Xiu, Xue & Xu, Meng & Zhao, Yixiu, 2024. "Noncontrolling shareholders' network centrality and corporate earnings management: Governance or conspiracy?," International Review of Financial Analysis, Elsevier, vol. 94(C).

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