Environmental Regulation And Enterprise Innovation

Since the reform and opening up,China has experienced forty years of extensive growth in terms of "drain the pond to get all the fish".While creating huge economic dividends,it has also brought a series of serious environmental problems.In the long run,these problems seriously restrict the sustainable development of China’s economy.In order to deal with the economic and environmental challenges,the Chinese government needs to formulate strict and appropriate environmental regulatory policies.Considering that enterprises are not only the main body of pollution prevention but also the main body of innovation,academic circles are very concerned about the impact of environmental regulations on enterprise innovation.However,the research conclusions have not reached a consensus so far.Therefore,it is necessary to clarify the relationship between environmental regulations and enterprise innovation,test whether the "Porter Hypothesis" exists,and provide more accurate quantitative analysis for policy evaluation.For this reason,after reviewing relevant literature,this paper sorts out the influence mechanism of the relationship between environmental regulation and enterprise innovation,and further puts forward two research hypotheses.In order to verify the rationality of the hypothesis,this paper uses the "National Total Emission Control Plan for Major Pollutants during the Eleventh Five-Year Plan" promulgated by the State Council in 2006 as a quasi-natural experiment to accurately identify the net causal effect of this environmental policy on enterprise innovation.Moreover,this paper applies difference-in-differences(DID)strategy and difference-in-difference-in-differences(DDD)strategy by using Chinese industrial enterprises data and patent data during 2000-2009 to identify the impact,and conducts the robustness tests and permutation test to respectively confirm these results.The results show that environmental regulations will significantly promote the enterprise innovation in general,proving that the "Porter Hypothesis" does exist in China.However,environmental regulations have different effects across enterprises of different industries,different types of ownership and different size.They can inhibit enterprise innovation in heavy pollution industry,but they will promote the innovation of larger enterprises and state-owned enterprises more significantly than small enterprises and enterprises of other ownership types.Finally,two suggestions are put forward according to the research results...