Does informal environmental regulation matter? Evidence on the different impacts of communities and ENGOs on heavy-polluting firms’ green technology innovation

Abstract

Firms, especially heavy-polluting firms, are facing intense pressure from informal environmental regulations, which play a unique role in promoting heavy-polluting firms’ green technology innovation (GTI). Communities and ENGOs are two important informal environmental regulation entities that have different influence mechanisms to stimulate heavy-polluting firms in GTI. The research results indicate that heavy-polluting firms’ GTI follows an inverted U-shape as the number of communities around these firms increases, whereas it follows a positive linear correlation as the number of ENGOs increases. Interestingly, ownership types and administrative hierarchy distance positively moderate the curvilinear and linear relationships. State-owned enterprises (SOEs) are more inclined to maintain their legitimacy by fulfilling communities’ and ENGOs’ environmental requirements than non-SOEs. A shorter administrative hierarchy distance means that firms are supervised by high-level governments. The autonomy effect of lower-level governments does not affect the vigorous enforcement of environmental policies, which also enhances these two relationships.

Keywords:

• informal environmental regulation
• community
• ENGO
• green technology innovation

Disclosure statement

The authors report there are no competing interests to declare.

Data availability statement

Data sharing is not applicable to this article.

Additional information

Funding

This work was supported by the high-level base platform (Hubei Institute of Economic Construction) construction project “Research Platform of Knowledge Action Mechanism for Improving Innovation Capability of Key Core Technologies in China in the Context of Double Cycle”; research innovation project for doctoral students of Zhongnan University of Economics and Law [Grant Agreement No. 202211001].