2.1.3. The Realization Conditions of the Porter Hypothesis

The Porter hypothesis posits that well-designed environmental regulation can stimulate enterprises to carry out technological innovation and engender innovation compensation effects which help to improve the competitiveness of enterprises and their productivity [34,47]. Therefore, taking advantage of the innovation effects of environmental regulation is the key to achieve a win-win situation between environmental protection and economic development [48]. Accordingly, the existing literature mainly discusses the realization of the conditions of the Porter hypothesis from the following two aspects. On the one hand, some scholars discussed the impact of the fiscal policy, foreign direct investment, financial development, industrial structures, and factor endowment on the Porter hypothesis from the macro-level perspective. For example, Song et al. [49] analyzed the compound effects of fiscal decentralization and environmental regulation on GTFP in the Yangtze River economic belt and found that appropriate fiscal decentralization can contribute to the realization of the Porter hypothesis. Qiu et al. [38] explored the relationship between environmental regulation, FDI, and industrial GTFP, based on Chinese provincial panel data, and confirmed that FDI can accelerate the realization of the Porter hypothesis through the channel of the technology spillover effect. Lv et al. [50] examined the impact of financial development on green innovation under environmental

regulation and confirmed that the financial structure was conducive to the realization of the Porter hypothesis, while the financial scale and financial efficiency had a negative effect on green development. Wang and Shen [36] investigated the relationship between industry structure changes and environmental productivity by using the Lema index and verified that industrial agglomeration had a significant positive effect on the innovation effects of environmental regulation. Xie et al. [51] employed a panel threshold model to examine the relationship among environmental regulation, human capital, and GTFP, and confirmed that the improvement of human capital structure significantly promoted the realization of the Porter hypothesis. On the other hand, some people discussed the impact of the enterprise ownership structure, the enterprise trade advantage, and enterprise resource misallocation on the Porter hypothesis from the microeconomic perspective. Peng et al. [25] confirmed that state-owned enterprises had lower productivity, on average, than non-stateowned enterprises, based on a large panel of data on Chinese industrial enterprises from 1998 to 2007, indicating that the impact of the ownership structure on the Porter hypothesis was very significant. Tang et al. [52] used a difference-in-difference framework to estimate the impact of export on productivity under environmental regulation and verified that an export advantage contributed to the realization of the Porter hypothesis. Based on the panel data of Chinese listed companies, Cai and Ye [33] confirmed that bank credit misallocation inhibited the realization of the Porter hypothesis. The conclusion is consistent with Lin and Chen [10] who found that factor market distortion had a negative influence on China's GTFP growth. Most notably, the reform of the economic system was an important factor affecting the realization of the Porter hypothesis. To date, few scholars have investigated whether an increase in the environmental regulation intensity will affect China's GTFP growth through the moderating effect of governance transformation.
