Does Proactive Green Technology Innovation Improve Financial Performance? Evidence from Listed Companies with Semiconductor Concepts Stock in China

Abstract

Academia and business alike are paying increasing attention to innovation in green technology due to the potential environmental and financial performance benefits. However, a limited amount of research has been carried out on the effect of proactive green technology innovation on corporate financial performance. This study examines the effects of two dimensions of proactive green technology innovation, namely, proactive green process innovation and proactive green product innovation, on corporate financial performance. Moreover, the moderating role of absorptive capacity on these relationships is introduced. The proposed hypotheses were tested empirically using a dynamic panel dataset of 126 Chinese listed semiconductor concept stocks from 2010 to 2020 and a difference-GMM approach. It was found that proactive green process innovation has a significant positive effect on both short-term and long-term corporate financial performance. Moreover, proactive green product innovation has a significant positive effect on long-term corporate financial performance. However, it does not improve short-term corporate financial performance. In addition, absorptive capacity has a positive moderating effect on the relationship between proactive green process innovation and both short-term and long-term corporate financial performance, and shows a positive moderating effect on the relationship between proactive green product innovation and long-term financial performance. However, it has a significant negative moderating effect on short-term corporate financial performance. Thus, we suggest that firms adopt more supportive proactive green technology innovation practices in order to improve their financial performance.

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