Government environmental protection subsidies and corporate green innovation: Evidence from Chinese microenterprises

This paper explores the impact of government environmental protection subsidies on corporate green innovation using panel data of listed companies from 2007 to 2019. The results show that such subsidies can significantly promote corporate green innovation, and the results are robust. Financing constraints, research and development (R&D) willingness, and resource allocation efficiency are important variables for government environmental protection subsidies to promote corporate green innovation. Further analysis shows that compared with industrial policies at the provincial level, the key supportive industrial policies at the central level have a more obvious reinforcing effect on government environmental subsidies to promote enterprise green innovation. Furthermore, government environmental subsidies in the eastern, middle, and western regions benefit the promotion of enterprise green innovation, and the promotional effect is stronger in the middle and western regions. Compared with state-owned enterprises, government environmental subsidies have a more obvious promotional effect on promoting green innovation of non-state-owned enterprises. This paper provides strong theoretical inspiration for better playing the positive incentive role of government intervention with the help of government environmental protection subsidies.