1. Introduction
Technological innovation stands as an intrinsic catalyst of sustainable economic expansion, particularly in the context of the rapidly evolving exogenous milieu [
1]. As the ramifications of global challenges, such as resource scarcity and ecological decay, intensify, a burgeoning consensus has emerged among economies worldwide—spanning both industrialized and emerging nations—with a pronounced focus on sustainable and eco-friendly growth, a trend particularly pronounced in the latter [
2]. Green innovation and green development, as a development model to achieve a balanced economic, social, and ecological environment, is based on the principles of recycling and sustainable and low emissions, and focuses on improving the efficiency and capacity of green development [
3,
4].
From the perspective of international trends, the adoption of environmental regulatory policies to catalyze the green metamorphosis of corporations represents a prevalent international strategy. The promotion of green technological innovation and sustainable development has experienced a new round of global scientific and technological revolution and is an important new area of enterprise market competition [
5]. Central to the achievement of sustainable development objectives is the imperative to attenuate the resource intensity across key economic sectors and to embrace a circular economic paradigm. Green technology innovation focuses on reducing consumption, reducing pollution, improving the supply of ecological technology, and promoting the transition of the economy and society to a green mode of development and lifestyle [
6] Such innovation promises a dual-fold advantage: it is capable of mitigating environmental contamination and bolstering a firm’s environmental stewardship, while concurrently enhancing its core competitiveness. This positions green technology innovation as a pivotal instrument in actualizing the symbiotic triumph of economic prosperity and environmental conservation [
7].
From the viewpoint of domestic trends, since the 18th National Congress of the Communist Party of China (NCCPC), the government of China has repeatedly emphasized the new development concept of green and sustainable development. The report of the 20th NCCPC once again emphasized high-quality economic development and the green transformation of accelerated development methods, promoting the formation of green and low-carbon production and lifestyle. This underscores that pursuing green development is a critical strategy for the national economy and people’s livelihood, and is an inevitable choice for achieving high-quality development in China. Numerous studies have indicated that green and sustainable industrial activities and technological innovation have significantly increased under the guidance of national sustainable development policies [
8,
9].
Practice has shown that relying solely on micro-entities, such as enterprises, to achieve green technology innovation and economic structural transformation is often insufficient [
8,
9,
10,
11,
12]. Meanwhile, according to the perspective of institutional economics, a reasonable external institutional environment design can effectively improve the performance of micro-entities [
13]. However, whether the series of environmental regulatory policies proposed by the government can achieve their intended goals is often influenced by factors such as the response strategies of micro-entities and the internal and external environment [
14,
15]. The existing studies have demonstrated that, under command-based environmental regulatory tools, firms tend to engage in more strategic innovation behaviors, which can adversely affect the quality of green innovation [
11,
12,
14,
15]. Consequently, Chinese regulators have increasingly emphasized market-based environmental regulatory tools, such as carbon emissions trading [
16], environmental protection tax law, and sewage charging system [
17,
18]. Hu et al. (2020) and Guo (2019) emphasize the important role of market-based environmental regulation in promoting technological innovation. However, the impact of market-based environmental regulatory instruments on firms’ green technological innovation still requires further in-depth investigation [
16,
17,
18,
19,
20]. The existing studies lack comprehensive and detailed investigations into this issue. Whether market-based environmental regulation can promote substantive green innovation by firms is still an unanswered question.
Concurrently, as the concept of green development—“green mountains and clear waters are mountains of gold and silver”—becomes deeply ingrained in public consciousness, there is increasing attention on the green innovation activities of enterprises. In addition, in the era of self-media, the supervision of enterprises by external groups, such as the public, has significantly increased. Therefore, corporate social responsibility, as a corporate behavior that the public can directly pay attention to, is bound to have a certain impact on the innovation of enterprises, especially green innovation [
21,
22,
23].
The existing studies have pointed out that CSR can promote the level of technological innovation, the improvement in innovation efficiency, and the increase in innovation output [
24,
25], which is conducive to the enhancement in enterprise value and competitiveness [
26,
27]; the fulfilment of CSR can alleviate the financing constraints of enterprises, enhance the employees’ career acquisition sense, reduce management’s short-sighted behaviors, and thus promote corporate innovation [
21,
22,
23,
24,
25,
26]. The positive impact of CSR has been widely recognized. However, whether CSR influences the effectiveness of market-oriented environmental regulations remains to be investigated. Whether CSR acts as a “catalyst” that assists in the implementation of environmental regulations or as a means of concealment requires further research [
27,
28,
29]. The existing research has not thoroughly explored this issue, and in-depth investigation is needed.
In summary, many scholars have examined the impact of environmental regulations and green technology innovation from both theoretical and empirical perspectives. However, there is a clear gap in the existing literature on the impact of market-based environmental regulation on firms’ green technological innovation, especially when considering the role of corporate social responsibility (CSR) in terms of market-based environmental regulation and green technological innovation. Against this background, this study aims to explicitly investigate the following research questions: how does market-based environmental regulations affect green technological innovation among Chinese firms, and what are the roles of CSR and financing constraints in this context?
Accordingly, this study selected a sample of 746 A-share listed companies in China from 2008 to 2021. It adopted a two-way fixed-effects model, a moderated-effects test model, and a mediated-effects test procedure to study the impact of market-based environmental regulation on corporate green technological innovation. Additionally, the study examined how CSR influences the underlying mechanisms mediating between environmental regulation and green innovation, providing a comprehensive analysis of this relationship. The research has found that market-oriented environmental regulations have a significant promoting effect on green technology innovation in enterprises. In addition, the reinforcing effect of CSR is particularly evident in strategic green innovation, but not in substantive green innovation, suggesting the existence of a “masking effect” of CSR, whereby firms symbolically respond to policy pressures from government regulators through the fulfilment of their social responsibilities. Market-oriented environmental regulations promote substantial green technology innovation by alleviating financing constraints on enterprises, improving the efficiency of innovation resource allocation, and ultimately promoting substantial green technology innovation in enterprises.
The contributions of this paper are threefold. Firstly, it expands the theoretical research on the impact of market-oriented environmental regulation on enterprises’ green technological innovation, offering a more detailed understanding of this relationship. Secondly, it transcends the limitations of the existing studies that primarily focus on CSR within the framework of command-and-control and public-participation environmental regulation. This study integrates CSR into the analytical framework of market-based environmental regulation and green technological innovation, exploring the mechanism through which CSR regulates the effect of environmental regulation on the promotion of corporate green technological innovation and validating the “masking effect” of CSR. Lastly, this study explores the mechanism of financing constraints between market-oriented environmental regulations and corporate green technology innovation, providing a new perspective for understanding the relationship between environmental regulations and corporate green technology innovation.
The structure of the remaining sections of this study is outlined as follows:
Section 2 delineates the research hypotheses of this paper.
Section 3 details the research methodology, encompassing the selection of samples, data sources, variable definition, and measurement, and model setup.
Section 4 reports the empirical results and discussion.
Section 5 describes the conclusions of the study, policy recommendations, limitations, and future research directions.