Impact of Heterogeneous Environmental Regulation on Enterprises’ Differentiated Green Innovation: The Mediating Role of Knowledge Search

Abstract

The relationship between environmental regulation and green innovation has long been debated. One possible reason is that most studies overlook the dual heterogeneity of environmental regulations (command-and-control and market-based) and green innovation (strategic and substantive). Drawing on the institutional theory and knowledge management theory, this study develops a theoretical framework of “environmental regulation–knowledge search–enterprise green innovation.” Using multiple linear regression and fuzzy-set qualitative comparative analysis (fsQCA), this paper tests the hypotheses based on 285 enterprise survey responses. The findings show that command-and-control environmental regulation promotes only strategic green innovation, whereas market-based environmental regulation promotes only substantive green innovation. Knowledge search depth mediates the relationship between command-and control environmental regulation and strategic green innovation, while knowledge search breadth mediates the relationship between market-based environmental regulation and substantive green innovation. Furthermore, the fsQCA results identify five causal configurations, including two configurations leading to high strategic green innovation and three leading to high substantive green innovation. These findings expand the research dimensions on how environmental regulation influences enterprise green innovation and offer insights for governments to adjust regulatory policies and for enterprises to respond to external institutional pressures.

Keywords

command-and-control environmental regulation / market-based environmental regulation / strategic green innovation / substantive green innovation / knowledge search

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Higher Education Press