Corporate environmental efforts, government environmental subsidies, and corporate non‐environmental R&D intensity: Evidence from listed firms

Abstract

Drawing on the behavioral theory, this study examines how the misalignment between a firm's environmental effort and the level of subsidies received from the government in affecting the firm's investment in non‐environmental R&D. Based on a sample of Chinese A‐share listed firms from 2008 to 2019 and using polynomial regression techniques, our findings reveal that firms in the “low effort‐high subsidies” group exhibit lower non‐environmental R&D intensity compared to firms in the “high effort‐low subsidies” group. This study contributes to the literature by shedding light on the interplay between corporate environmental efforts, government subsidies, and non‐environmental R&D investment. The findings suggest the importance of aligning the environmental efforts of firms with subsidy levels from the government to effectively allocate resources for different types of R&D. The implications of this research suggest that firms should carefully consider aligning their environmental efforts with government subsidies to optimize their investment in non‐environmental R&D and overall innovation strategy. Furthermore, the study indicates that firms and governments should prudently balance the relationship between environmental R&D and non‐environmental R&D to avoid any negative impact on the latter.

Diversified boards and the achievement of environmental, social, and governance goals

“…Recent innovations in ESG research have centered on multifaceted relationships and nuanced considerations. Chen, Lv, et al (2023) explored the alignment between environmental efforts, government subsidies, and non-environmental R&D in Chinese organizations, highlighting the need for strategic alignment.…”