Government institutions and firms environmental innovation: The moderating role of Confucian culture

Against the backdrop of the increasingly deteriorating global ecological environment, government institutions play an important role in promoting environmental innovation and achieving sustainable development. Based on institutional theory and cultural theory, this study explores the impact of two types of government institutions on firms’ environmental innovation, as well as the moderating role of Confucian culture. This study selected heavily polluting firms listed on the Shanghai and Shenzhen A-shares in China from 2015 to 2021 as the research sample. The results indicate that both environmental regulations and green taxes have a significant positive impact on firms’ environmental innovation. The impact of green taxes on firms’ environmental innovation is positively moderated by Confucian culture, while the impact of environmental regulations on firms’ environmental innovation is negatively moderated by Confucian culture. After robustness testing, this conclusion holds. This study provides a useful reference for the government to formulate reasonable policies based on the level of Confucian culture in various regions to promote firms’ environmental innovation.