Research On Innovation Effect Of Firms' Voluntary Environmental Regulation

Although traditional command-and-control environment regulation plays an important role in controlling pollution,it is often viewed as a drag on efficiency and an obstacle to firm innovation in the long run.In contrast,the Porter Hypothesis holds that appropriately designed environmental regulations can enhance innovation and improve the long-term competitiveness of firms by triggering "innovation offsets",i.e.,the benefits of innovation compensate for some or all of the cost of compliance under the environmental regulation.In recent decades,due to its flexibility and autonomy,voluntary environmental regulation has increasingly demonstrated its advantages that are beneficial to the long-term development of firms.One of the major advantages is that the"compensation for innovation" effect may be realized under voluntary environmental regulation.This article is aimed to verify the Porter Hypothesis from the perspective of voluntary environmental regulation,taking the ISO 14000 environmental management standard as an example to explore the impact of voluntary environmental regulation on firm innovation.This paper discusses the mechanism of the innovation effect of voluntary environmental regulation through theoretical analysis.At the same time,it makes a detailed econometric analysis of the survey data of Chinese industrial enterprises.In the empirical study,this paper fully considered the influence of regional,industry,and firm heterogeneity,and comprehensively used different methods including alternative variables for dependent variables,comparison with government environmental regulations,instrumental variables,and Heckman selection models.In this way,the results of the study were thoroughly tested for robustness.Through the combination of theoretical analysis and econometric analysis,the following three main conclusions are drawn:(1)The ISO 14000 environmental management standard certification stimulates both the input and output of firm innovation,that is,R&D investment(innovation input)and the number of patents(innovation output)both increases under voluntary environmental regulation.(2)Compared with traditional government environmental regulation,voluntary environmental regulation plays a more significant role in promoting firm innovation.(3)All in all,voluntary environmental regulation may bring about the effect of“innovation offsets"proposed by the Porter Hypothesis,providing new empirical evidence for the establishment of the Porter Hypothesis in developing countries.The main innovation of this paper is to pay attention to the voluntary environmental regulation of firms in developing countries,and to verify the "innovation offsets" effect of the core idea of the Porter Hypothesis from a new perspective;at the same time,this paper's study is at the micro level of firm,and the diversified selection of variables and models makes the measurement results more credible;this paper has implications for the implementation of voluntary environmental regulation in developing countries,proposing policy recommendations for the promotion of voluntary environmental regulations by developing country governments and the implementation of voluntary environmental regulations for firms.