Subsidies, green innovation, and the sustainable performance: evidence from heavy-polluting enterprises in China

• Published in: Journal of environmental studies and sciences 2024-03, Vol.14 (1), p.102-116
• Main Authors: Cheng, Hua, Yu, Yinhong, Zhang, Shiyu
• Format: Article
• Language: English
• Subjects: Catalysts; Earth and Environmental Science; Economic development; Economic growth; Economics; Environment; Environmental management; Environmental performance; Impact analysis; Innovations; Research and Theory; Subsidies; Sustainability; Sustainable Development
• ISSN: 2190-6483; 2190-6491
• DOI: 10.1007/s13412-023-00875-0

Persistent environmental pollution from heavy-polluting enterprises poses a significant challenge to sustainable economic growth in China. To address this, this study investigates the intricate interplay between government subsidies, green innovation, and the sustainable development performance of 142 listed companies in China’s heavy-polluting industry. Green innovation is assessed on two key dimensions: quantity and quality. The findings reveal a noteworthy link between subsidies and improved financial, environmental, and social performance of these enterprises. Subsidies serve as catalysts for enhancing the green innovation capabilities of these companies, with a slight preference for fostering innovation quality over quantity. Notably, while green innovation positively influences the environmental performance of these enterprises, its impact on economic and social performance remains negative. Crucially, this study shows that green innovation has a mediating effect between subsidies and environmental performance; however, it has “suppressing effects” between subsidies and financial performance, as well as between subsidies and social performance. These results not only contribute to the body of knowledge on the role of subsidies in promoting sustainable development within enterprises but also provide valuable insights for government decision-makers aiming to optimize subsidy programs in the pursuit of greener and more sustainable heavy-polluting industries in China.