Can Executives’ Foreign Experience Promote Corporate Green Innovation? —Evidence from Chinese Energy Firms

ABSTRACT

Green innovation is an important driving force for energy firms to improve their competitive advantage and an important path to achieve the goals of “carbon neutrality” and “carbon peaking.” This paper examines whether and how executives’ foreign experience influences green innovation in Chinese energy firms. Using data on the foreign experience of executives, we discover that the foreign executives’ experience is positively correlated with corporate green innovation. Potential mechanisms analyses imply that enhancement of environmental ethics and comprehensive competency are two important channels by which foreign experience of executives influences green innovation. In addition, moderating effects indicate that the positive association between the foreign experience of executives and green innovation is dominant in energy firms with fewer financing constraints, state-owned energy firms, and firms with less market competition. Finally, we find that the positive impact of executives’ foreign experience on corporate green innovation is different in aspects such as the subindustries, whether executives have U.S. experience, length of stay abroad, the age of executives going abroad and positions, while there is no significant difference in different types of foreign experience. In summary, these results imply that executives’ foreign experience is a crucial factor in fostering green innovation of energy firms.

KEYWORDS:

• Energy firms
• executives’ foreign experience
• green innovation

JEL:

• G1
• G3
• G18

Acknowledgments

We would like to thank the Professor Chang Chun-Ping, anonymous referees and the editor for very helpful suggestions and comments which led to improvements of our original paper.

Disclosure Statement

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

Notes

1. Since the measure is the natural logarithm of one plus the number of green patent applications, the original number is 1.018 (= $e^{0.702}$- 1).

2. 0.270 (=$e^{0.239}$- 1) is the logarithmically transformed value of the Foreign experience coefficient.

3. 0.270 indicates that a firm with executives with foreign experience file 0.270 more green patent applications than a firm without executives with foreign experience, and 1.018 demonstrates that the sample firms file an average of 1.018 green patent applications per year. The numbers in the following three parentheses in this section have the similar meaning.

4. Financing constraints (FC) is computed as the absolute value of the SA index created by Hadlock and Pierce (2010).

5. State-owned enterprises (SOE) is an indicator variable that takes value 1 if the enterprise is a state-owned energy enterprise and the value 0 otherwise.

6. The market competition faced by the company is measured by the Herfindahl Index (HHI).

7. The fossil-energy industry includes the coal industry, the oil industry, and the natural gas industry, the remaining industries are non-fossil energy industries.

Additional information

Funding

This work is supported by the Major Project of Hunan Province Education Department [21A0215], National Natural Science Foundation of China [72101035, 71701081], Excellent Youth Foundation of Educational Committee of Hunan Provincial [21B0339], and Changsha University of Science & Technology Graduate Student “Practical Innovation and Entrepreneurship Enhancement Program” Project [CLSJCX23093].