1. Introduction
Since the concept of “sustainable development” was proposed, it has become a key topic of concern. As an important micro-subject in the social economy, the sustainable development of enterprises is closely related to China’s macro economy, which can promote the economic prosperity of China and the region. Sustainable development of enterprises refers to the process in which enterprises pursue self-survival and sustainable development, not only achieving business goals and improving market positions, but also maintaining profitability and growth ability. In 2022, “green development” was mentioned many times in the work report of the 20th National Congress of the Communist Party of China, which proposed that China should implement a comprehensive conservation strategy, develop green and low-carbon industries, accelerate the green transformation of the development mode, and realize the sustainable development of enterprises. It can be seen that how to effectively respond to the current economic environment, maintain the long-term competitive advantages of enterprises, and achieve the sustainable development of enterprises has become an important theoretical frontier issue that current enterprise management should pay attention to. Many scholars have conducted extensive research on the influencing factors of the sustainable development of enterprises, and from the existing literature, scholars mainly conduct research on enterprise’s social responsibility, internal control, enterprise innovation and digital technology, and entrepreneurship. From the perspective of enterprise social responsibility, charitable donations can be used as a measure of an enterprise’s social responsibility [
1]. Through research, it has been found that enterprise social responsibility can help achieve the unity of economic and social interests and enhance its social status and competitiveness [
2]. From the perspective of internal control, it can regulate the internal behavior of enterprises, improve their management and risk prevention capabilities, improve their investment and financing environment, and enhance their business performance [
3], playing a role in promoting the sustainable development level of enterprises. The positive interaction between enterprise social responsibility and internal control quality can achieve an interactive impact on the sustainable development level of enterprises, resulting in a “1 + 1 > 2” synergistic effect [
4], and the institutional environmental factors such as the marketization process, the level of rule of law, and the government’s governance efficiency can play a positive moderating role in the positive relationship between the quality of internal control and enterprise sustainable development [
5]. From the perspective of enterprise innovation, innovative strategies help enterprises establish and enhance dynamic capabilities in a stable and rapidly changing environment, thereby maintaining their long-term competitive advantage [
6]. Enterprises can enhance the cohesion of innovation teams by increasing human capital investment [
7]; improving production efficiency; reducing production costs; increasing enterprise profits through technological innovation; improving resource acquisition, allocation, and utilization efficiency through management innovation [
8] to enhance the long-term competitive advantage of enterprises; improving the sustainable development performance of enterprises; and promoting the sustainable development of enterprises. From the perspective of digital technology and entrepreneurship, the rapid development of digital technology helps enterprises transform their business models, reduce costs, shorten the life cycle of technology-based goods and services, provide higher values for the products and services customers need, and promote sustainable growth of enterprises [
9]. Digital technology tools also enhance enterprise entrepreneurship by creating innovation and new ideas, creating and promoting entrepreneurial spirit, and providing new opportunities and facilities for enterprises, thereby effectively improving and enhancing the sustainable development of enterprises [
10]. In particular, young people empowered with entrepreneurial opportunities can actively shape and influence the sustainable development goals of enterprises by mastering and managing complex global challenges [
11].
As one of the important resources for enterprises to form and maintain their competitive advantages, labor plays a vital role in the development of enterprises. Therefore, in order to protect the legitimate rights and interests of workers and build and develop harmonious and stable labor relations, China successively promulgated the “Minimum Wage Regulations” in 2004, and implemented a series of documents and regulations related to labor protection such as the “Labor Contract Law of the People’s Republic of China” (hereinafter referred to as the “Labor Contract Law”) in 2008, continuously strengthening the intensity of labor protection. With the continuous advancement of China’s labor protection system, many scholars began to evaluate the microeconomic consequences of China’s labor protection. However, based on the existing literature, there is no consensus in the academic community on the evaluation of the effectiveness of labor protection implementation. Scholars mainly conduct research on the positive and negative effects of labor protection in terms of enterprise cost, enterprise investment, enterprise value, and enterprise innovation. On the one hand, the strengthening of labor protection will increase the wages of in-service employees [
12] and increase the adjustment cost of employment in enterprises [
13], thereby damaging their operational flexibility [
14], exacerbating the stickiness of labor costs in enterprises [
15], reducing the elasticity of labor demand in enterprises, and limiting their employment flexibility [
16]. Additionally, with the strengthening of labor protection, enterprises with higher labor intensity are more prone to underinvestment [
17]. On the other hand, the strengthening of labor protection will increase the productivity of enterprises by increasing investment in training funds and the degree of factor substitution [
18], stimulating enterprises to increase research and development investment, improving business performance [
19,
20], accelerating enterprise transformation and promoting enterprise innovation [
21], enhancing enterprise value [
22,
23], significantly increasing the probability of Chinese enterprises conducting outward direct investment [
24], enhancing the investment level of Chinese enterprises [
25], reducing the export probability and export volume of private enterprises [
26], and improving the quality of Chinese enterprises’ export products [
27].
China began to implement the “Labor Contract Law” in 2008, which clearly stipulates the formation, performance, modification, rescission, termination, and other aspects of the “Labor Contract Law” between employers and workers, greatly enhancing the protection of the legitimate rights and interests of workers. It is at the core of China’s labor protection system and a concentrated embodiment of labor market regulations. In addition, the promulgation of this law also affects the human capital investment and production and operation behavior of enterprises, thereby having a significant impact on their innovation and further affecting the sustainable development of different labor-intensive enterprises. The current academic community has conducted in-depth research on labor protection, enterprise innovation capabilities, and sustainable development capabilities, resulting in a large number of research results. However, throughout the existing literature, the relationship between these three has not been explored to a large extent, so the research in this paper has strong significance.
In view of this, this article takes 9911 listed companies in China’s Shanghai and Shenzhen A-shares from 2005 to 2013 as samples and uses the implementation of the “Labor Contract Law” in 2008 as a quasi-natural experiment to study the impact of labor protection on the sustainable development of enterprises using the difference-in-difference model. Compared with the existing literature research, the theoretical contributions of this article are mainly reflected as follows: firstly, based on the quasi-natural experiment of the implementation of the “Labor Contract Law”, this study explores the impact and mechanism of labor protection on the sustainable development of enterprises, expands the evaluation scope of the implementation effect of the “Labor Contract Law”, enriches the relevant literature on labor protection, and expands the research on the influencing factors of the sustainable development of enterprises. Secondly, this paper focuses on the role of enterprise innovation as a mediating variable in the channel between labor protection and the sustainable development of enterprises, providing a new perspective for people to understand the relationship between the two. Thirdly, considering the special national conditions of China, this paper analyzes the heterogeneity of enterprise property rights, market marketization degree, and enterprise scale to increase the depth of research.
The subsequent parts of this paper are structured as follows: the second part is the theoretical basis and research hypothesis; the third part is the research design; the fourth part is the empirical results and analysis; and the fifth part is the research conclusion and discussion.
5. Discussion
5.1. Research Implications
Firstly, it further enriches the relevant research results on the impact of China’s macroeconomic environment on the sustainable development of enterprises. The existing research results mainly focus on the impact of corporate social responsibility, internal control, corporate innovation, digital technology, and entrepreneurship on the sustainable development of enterprises, but there is still a lack of research in the factor market environment. There is relatively little discussion on whether changes in the market economy environment will affect the sustainable development of enterprises. This study can provide further supplements to the relevant literature in the field of sustainable development of enterprises.
Secondly, the mechanism by which the “Labor Contract Law” affects the economic behavior and decision-making of enterprises has been supplemented. The current literature analysis mainly explores the impact of the “Labor Contract Law” on the economic contract signing, income level, and treatment level of enterprise employees, as well as the analysis of its impact on labor employment costs, management strategies, investment efficiency, and business flexibility. However, there is still insufficient research on the impact of enterprise labor security systems on the sustainable development of enterprises. The research in this article can broaden the scope of evaluating the effectiveness of the implementation of the “Labor Contract Law” and enrich the relevant literature on labor protection.
Thirdly, we investigate the mechanism of how the sustainable development of enterprises is influenced by labor protection. We show that innovation channels can explain the relationship between labor protection and the sustainable development of enterprises, providing a new perspective for people to understand the relationship between the two. In addition, we also consider the heterogeneity of enterprises and test whether the impact of labor protection differs across different features of enterprises.
5.2. Practical Implications
Linking labor protection with the sustainable development of enterprises, there is currently a wide range of research on the issue of sustainable development of Chinese enterprises. This paper starts from a relatively novel legal perspective to study the internal relationship between public policies and the sustainable development of enterprises, which is conducive to promoting the standardization of labor employment in enterprises and improving the labor employment environment. At the same time, it provides evidence support for the evaluation of the implementation effect of the labor protection system and provides empirical inspiration for the improvement of the “Labor Contract Law”, which has practical significance.
5.3. Limitations and Future Research
The research conclusion may not have a universal pattern. This paper uses listed companies as research samples, which makes the empirical conclusions obtained in this article unable to be simply extended to non-listed enterprises. Moreover, internal management systems of enterprises of different natures and sizes do not have analogies, and policy motivations and financial decisions taken differ significantly. Therefore, the research conclusions do not yet possess universality, but are only speculative conclusions based on empirical evidence. In future research, different types of enterprises should be comprehensively considered, and the scope of research objects should be expanded to make the research conclusions universal and applicable.
Policy evaluation is not sufficient. The selection of public policies in this paper is single, only involving the “Labor Contract Law”, which cannot fully reflect the impact of public policies on the sustainable development of enterprises. It lacks comprehensiveness, and the policy recommendations are only for reference. To comprehensively reflect the impact of public policies on the sustainable development of enterprises, it is necessary to include as many public policies as possible in subsequent research, providing a more comprehensive and mature policy evaluation.