A Study on the Effect of Environmental Regulation on Green Innovation Performance: A Case of Green Manufacturing Enterprises in Pearl River Delta in China

Green innovation has become the topic of corporate sustainable development. Countries in the world formulate environmental regulation to drive corporate green innovation, while enterprises are getting lost in the selection of innovation strategy in environmental regulation. This study intends to discuss the effect of environmental regulation on exploration innovation, exploitation innovation, and green innovation performance. Based on the questionnaire survey of 220 green manufacturing enterprises in Pearl River Delta in China, Structural Equation Model is used for the analysis. The empirical results reveal insignificant effects of environmental regulation on green innovation performance that environmental regulation does not directly affect green innovation performance; exploration innovation requires more support of environmental regulation than exploitation innovation, while exploitation innovation shows better green innovation performance than exploration innovation; and, dual interaction between exploration and exploitation appears positive and remarkable effects on green innovation performance. As a result, an enterprise should develop dual interaction between exploration and exploitation, and environmental regulation is the drive and guarantee of green innovation.