Major government-background customers and corporate green innovation

ABSTRACT

Using a sample of 1,595 Chinese listed firms from 2009 to 2019 and the Ordinary Least Squares method, we find that major government-background consumers have a positive effect on corporate green innovation. This finding is robust to a battery of tests. Mechanism tests suggest that major government-background consumers promote corporate green innovation output by alleviating financial constraints rather than by providing information feedback. Further analysis shows that major government-background consumers improve green innovation efficiency and are conducive to green invention innovation and green utility innovation. Finally, we find that stronger intellectual property protection strengthens the association between major government-background consumers and corporate green innovation. Our study suggests that the identification of larger consumers plays an important role in green innovation.

KEYWORDS:

• Major government-background consumers
• corporate green innovation
• intellectual property protection
• China

JEL CLASSIFICATION:

• G30
• O30
• O31

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Following Li, Wang, and Wang (2017), we further classify stocks from the manufacturing industry into more detailed industry categories using a two-digit code.

² The mean value of the number of green patent application is 9.4985, and the mean value of the number of green patent citation is 16.7108..

³ SA index is defined as −0.737×Ln(Assets)+0.043×Ln(Asset)²-0.04×Firm age.