Environmental Regulation, technological innovation and firm performance-Empirical Evidence from Yangtze River Delta Region, China

Abstract

With the proposal of the strategic concept of sustainable development of green economy, environmental governance has become one of the hot issues in various regions. Under such intense environmental regulations, how to balance the interests of the enterprise with its own development and social interests is an important problem for the future development of firms. Therefore, this study selects 750 listed firms in the Yangtze River Delta region of China from 2016 to 2020 as a sample to explore the relationship among environmental regulation, technological innovation and firm performance. The results show that environmental regulation has a significant role in promoting firm performance.

Technological innovation plays a significant mediating role in the process of environmental regulation affecting firm performance. The environmental regulatory policies implemented by the government can promote firms to increase R&D investment, thus affecting firm performance. Therefore, firms need correctly understand the environmental regulation policies and realize the mediating effect of technological innovation between environmental regulation and firm performance. Furthermore, the government should emphasize the feedback effect of micro-firms on environmental regulatory policies, formulate reasonable environmental regulatory policies and achieve a "win-win" between environmental quality and firm performance.