How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from China
How to motivate enterprises to formulate green technology (GT) innovation is crucial for promoting green development and minimizing pollution control costs. This research employs a quasi-experimental approach to analyze the impact of environmental tax reform (ETR) on corporate innovation decisions....
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| Format: | Article |
| Language: | English |
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Vilnius Gediminas Technical University
2025-08-01
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| Series: | Journal of Business Economics and Management |
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| Online Access: | https://journals.vilniustech.lt/index.php/JBEM/article/view/24354 |
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| author | Hui Hu Yuqi Zhu Lin Ye Yulong Wang |
| author_facet | Hui Hu Yuqi Zhu Lin Ye Yulong Wang |
| author_sort | Hui Hu |
| collection | DOAJ |
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How to motivate enterprises to formulate green technology (GT) innovation is crucial for promoting green development and minimizing pollution control costs. This research employs a quasi-experimental approach to analyze the impact of environmental tax reform (ETR) on corporate innovation decisions. First, we construct a two-sector model within a single enterprise, where the enterprise produces goods using GT and non-green technology (NGT) respectively. ETR influences a company’s innovation choices by the relative market value, R&D intensity, and productivity of products manufactured using GT and NGT under profit maximization. Second, we test our model using 20122023 manufacturing firms’ data, and the empirical results confirm our theoretical predictions. Third, we perform robustness tests to exclude the impact of subsidies, command and control environmental supervision and the COVID-19 epidemic. Fourth, we conduct heterogeneity analysis in polluting level and market competition. Finally, this study uses two instrumental variables (IVs) to validate our main regression results: the interaction between regional water area and industrial chemical oxygen demand, and the proportion of days affected by temperature inversion. This study contributes to the literature related to innovation choices under environmental policy and has implications for directing firms’ innovation to GT.
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| format | Article |
| id | doaj-art-1e45d7a8f8ab4b3d8776ca2eaa0995e8 |
| institution | Kabale University |
| issn | 1611-1699 2029-4433 |
| language | English |
| publishDate | 2025-08-01 |
| publisher | Vilnius Gediminas Technical University |
| record_format | Article |
| series | Journal of Business Economics and Management |
| spelling | doaj-art-1e45d7a8f8ab4b3d8776ca2eaa0995e82025-08-24T07:52:51ZengVilnius Gediminas Technical UniversityJournal of Business Economics and Management1611-16992029-44332025-08-0126410.3846/jbem.2025.24354How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from ChinaHui Hu0https://orcid.org/0000-0002-3614-8678Yuqi Zhu1Lin Ye2Yulong Wang3Economic Development Research Centre, Wuhan University, Wuhan, China; School of Economics and Management, Wuhan University, Wuhan, ChinaSchool of Economics and Management, Wuhan University, Wuhan, ChinaCentre for Cultural Industry Research, Central China Normal University, Wuhan, ChinaSchool of Economics and Management, Wuhan University, Wuhan, China How to motivate enterprises to formulate green technology (GT) innovation is crucial for promoting green development and minimizing pollution control costs. This research employs a quasi-experimental approach to analyze the impact of environmental tax reform (ETR) on corporate innovation decisions. First, we construct a two-sector model within a single enterprise, where the enterprise produces goods using GT and non-green technology (NGT) respectively. ETR influences a company’s innovation choices by the relative market value, R&D intensity, and productivity of products manufactured using GT and NGT under profit maximization. Second, we test our model using 20122023 manufacturing firms’ data, and the empirical results confirm our theoretical predictions. Third, we perform robustness tests to exclude the impact of subsidies, command and control environmental supervision and the COVID-19 epidemic. Fourth, we conduct heterogeneity analysis in polluting level and market competition. Finally, this study uses two instrumental variables (IVs) to validate our main regression results: the interaction between regional water area and industrial chemical oxygen demand, and the proportion of days affected by temperature inversion. This study contributes to the literature related to innovation choices under environmental policy and has implications for directing firms’ innovation to GT. https://journals.vilniustech.lt/index.php/JBEM/article/view/24354corporate innovation choicesgreen technological innovationnon-green technological innovationenvironmental tax reformmanufacturing firmsquasi-natural experiment |
| spellingShingle | Hui Hu Yuqi Zhu Lin Ye Yulong Wang How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from China Journal of Business Economics and Management corporate innovation choices green technological innovation non-green technological innovation environmental tax reform manufacturing firms quasi-natural experiment |
| title | How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from China |
| title_full | How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from China |
| title_fullStr | How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from China |
| title_full_unstemmed | How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from China |
| title_short | How does environmental tax reform drive corporate innovation to green technologies? Quasi-natural experimental evidence from China |
| title_sort | how does environmental tax reform drive corporate innovation to green technologies quasi natural experimental evidence from china |
| topic | corporate innovation choices green technological innovation non-green technological innovation environmental tax reform manufacturing firms quasi-natural experiment |
| url | https://journals.vilniustech.lt/index.php/JBEM/article/view/24354 |
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