Fiscal Decentralization, Taxation Efforts and Corporate Green Technology Innovation in China Based on Moderating and Heterogeneity Effects

Abstract

Corporate green technology innovation is an effective way to achieve regional sustainable development goals (SDGs). Based on fiscal decentralization as a green function that empowers provincial governments with fiscal powers that are highly relevant to regional sustainable economic decision-making, this paper focused on the impacts of fiscal decentralization on corporate green technology innovation, as well as the moderating roles of taxation efforts. Taking China’s listed corporations from the period of 2005 to 2019 as the research sample, we constructed green technology innovation indicators at the corporate level. The empirical results were as follows: firstly, fiscal decentralization significantly promoted corporate green technology innovation on the whole; secondly, the synergy effects of fiscal decentralization and taxation efforts were strongly positive, implying a substantial promotion of corporate green technology innovation; thirdly, heterogeneity tests found that the synergistic effects of fiscal decentralization and taxation efforts were more significant in promoting corporate green technology innovation in eastern China, non-state-owned enterprises (non-SOEs) and manufacturing corporations. The above results were proven to be equally valid after a series of robustness tests. We suggest that provincial governments should be granted more fiscal autonomy, and that taxation efforts should be optimized to promote corporate green technology innovation.

1. Introduction

Green technology innovation is a major pillar of China’s implementation of the UN SDGs, which aim to guide the transition toward sustainable development paths by thoroughly addressing the three dimensions of development (i.e., social, economic and environmental) in an integrated manner, between 2015 and 2030. Simultaneously, against the backdrop of the severe carbon emission reduction responsibilities and targets faced by countries across the world, including China, green technology innovation could reduce carbon emissions by limiting carbon emission reduction costs [1] and improving carbon emission reduction efficiency [2], thereby achieving green and sustainable development. As the main bodies involved with green development, corporations play key roles in global sustainable development via their enthusiasm for innovative green technologies. In order to maximize the social value of corporations, scholars have been actively exploring the influencing factors for improving regional green technology innovation, providing feasible suggestions for policymakers to help to achieve the sustainable development of enterprises and society, and even sustainable global development.

Previous studies have investigated two major influencing factors on how to improve corporate green technology innovation: internal corporate factors and external governments’ fiscal systems and environmental policies. Internal corporate factors, including corporate life cycles [3], corporate scales [4] and internal corporate management [5], have been found to affect corporate green technology innovation. As far as government environmental policy is concerned, provincial governments first play pivotal roles, and are the backbones of promoting regional innovation [6], because they are responsible for implementing green innovation plans designed by the central government. Secondly, environmental protection tax [7,8] and carbon emissions trading [9] have been found to be positively associated with corporate green technology innovation. Thirdly, financial system reforms and taxation systems inevitably affect the behavior of provincial governments in terms of strategic corporate choice and, in turn, corporate green technology innovation [10]. Fiscal decentralization remains a fiscal system in which the central government uses fiscal revenue and expenditure to improve the quality of the natural environment. In essence, fiscal decentralization aims to hand over fiscal and financial power to provincial governments, to enable them to be responsible for sustainable economic decision-making [2,11].

Based on the above, there exist three potential research gaps in the current studies on green technology innovation. Firstly, limited attention has been paid to the role of fiscal decentralization on green technology innovation, especially from the corporate level. Secondly, current studies have shown contradictory evidence on the relationship between fiscal decentralization and green technology innovation. Some have documented that fiscal decentralization can promote green development by urging provincial governments to tighten environmental controls and promote environmental protection [12], while others have found that fiscal decentralization can inhibit green development because provincial governments focus on economic GDP development while ignoring environmental protection and green innovation efficiency [13]. Thirdly, the boundary conditions of taxation efforts on the relationship between fiscal decentralization and corporate green technology innovation have not been explored, neither their heterogeneity effects. Thus, these divergent results, and the absence of a moderating context and heterogeneity effects under which fiscal decentralization affects green innovation, make further research desirable.

To address these research gaps, we first drew the new structure economy theory (NSE) and “Tiebout hypothesis” to empirically investigate how fiscal decentralization influences corporate green technology innovation. Furthermore, we examined the moderating effect of taxation efforts on the relationship between these two variables, and tested whether there are potential heterogeneity effects. There are reasons why taxation could serve as a significantly conditional variable. Taxation efforts remain the way by which provincial governments adjust their fiscal revenue, which affects the behavior of provincial governments in terms of formulating and implementing regional innovation strategies. As the tax legislative power of the central government is highly unified and provincial governments cannot change tax rates, the fiscal decentralization system offers provincial governments a chance to change their taxation collection and management approaches [14]. With the decentralization of central finance, provincial governments often participate in tax competition by providing more tax incentives, such as reducing taxation efforts [15]. Tax competition via reducing taxation efforts aggravates environmental pollution because it can reduce the social levels of public goods that are provided by provincial governments [16]. Obviously, reducing taxation efforts increases tax competition, which leads to a mismatch between provincial innovation factors, including talents and capital [17]. In this way, reducing the taxation efforts of provincial governments leads to a loss of regional innovation factors. The literature concludes that taxation efforts can affect regional development by affecting the behavior of provincial governments. Therefore, it is necessary to explore whether there are synergistic effects of taxation efforts and fiscal decentralization on corporate green technology innovation, and to investigate ways to improve the effects from fiscal systems and taxation management systems of provincial governments.

Accordingly, this paper has three research questions: (1) How does fiscal decentralization influence corporate green technology innovation, and are there potential heterogeneity effects? (2) Do taxation efforts moderate the relationship between fiscal decentralization and corporate green technology? (3) What are the boundaries of the moderating effect? To answer these questions, we reviewed the existing literature, proposed research assumptions and developed our theoretical framework. Our main arguments are that fiscal decentralization is positively associated with corporate green technology innovation; the synergistic effects of fiscal decentralization and taxation efforts play positive roles in promoting corporate green technology innovation; and the synergistic effects are more pronounced when corporates are from the eastern regions, of non-SOEs and the manufacturing industry, respectively. To test our hypotheses, we collected firm-level unbalanced panel data, and incorporated firm, year and year × industry fixed effects, aiming to mitigate possible endogeneity problems and confounding factors of time-invariant, firm-specific characteristics and time trends, as well as industry-specific changes over time.

The novelties of this research are manifested as follows: firstly, this paper centered on green technology innovation; unlike previous works that paid attention to regional dimensions, our research focused on green technology innovation at the corporate level which was constructed on the basis of data of the WIPO. Secondly, this paper introduced the new structural economic theory into our theoretical framework to explain the influential mechanism of fiscal decentralization on corporate green technology innovation. According to this theory, when provincial governments enjoy a higher degree of fiscal decentralization, they have stronger responsibility for formulating and implementing development strategies with comparative advantages that incorporate green innovation development, recruit environmentally friendly industries and enterprises, and support green technology innovation. Thirdly, our study uncovered an important boundary condition of taxation efforts on our main effect. Taxation efforts can affect the behavior of provincial governments, which serves as a reasonable moderator to develop our theoretical framework.

Thus, this study contributes to previous studies in several aspects. Firstly, this paper extended the research stream in regional green technology innovation. We explored the role of fiscal decentralization at the macro level on corporate green technology innovation at the micro level, and we introduced a new perspective of new structural economic theory to investigate influential mechanisms. Secondly, we enriched the research on the main effect by exploring an important regional contingency—taxation efforts. Overall, our findings offer novel insights for policymakers to exert synergistic effects of a fiscal decentralization system and tax collection and management systems, to boost corporate green technology innovation.

The rest of the paper is structured as follows: the second section of this paper presents a review of the relevant literature; the third section introduces the theoretical analysis, research assumptions and develops our theoretical framework; the fourth section introduces the materials and methods; the fifth section presents the regression results and robustness checks; the sixth section gives the conclusions and recommendations, and presents limitations and areas for future study.

2. Literature Review

2.1. Fiscal Decentralization

The existing literature has investigated the role of fiscal decentralization in economic development [18,19], direct foreign investment [20], the behavior of provincial governments [21], and more, yet the relationship between fiscal decentralization and green development has only recently become the focus of academic researchers and policymakers [11]. Previous studies have examined this relationship from the perspectives of environmental pollution and the efficiency of green innovation at the provincial level, but their findings have been inconsistent or contradictory.

The former view suggests that fiscal decentralization plays a positive role in green development. Song et al. [13] estimated the total green factor productivity of 11 provinces in the Yangtze River Economic Belt, and incorporated fiscal decentralization and green technology innovation into a DEA model. Their empirical results showed that fiscal decentralization promoted green innovation efficiency. Zhou et al. [22] used Chinese provincial panel data to examine the impact of fiscal decentralization on environmental innovation. Their results revealed that fiscal decentralization was conducive to improving the allocation of financial resources and the responsibility of provincial governments to protect the environment, thus promoting environmental innovation. He [23] used Chinese provincial panel data to examine the effects of fiscal decentralization on pollution abatement spending and pollutant discharge fees via GMM estimation. Based on data from OECD countries from 1990 to 2019, Sun et al. [11] explored the relationship between fiscal decentralization and green investment. The findings showed that fiscal decentralization promoted green investment, and hence, improved green development. Based on the data of seven countries from 1996 to 2017, including Brazil, South Africa, Canada, Germany, Japan, the United Kingdom and the United States, Chi et al. [24] discussed the relationship between fiscal decentralization and green technology innovation; the empirical results showed that fiscal decentralization promotes enterprise technological innovation. The empirical results showed that fiscal decentralization had a positive effect on protecting the environment by promoting pollution abatement spending and pollutant discharge fees.

The latter view holds the opposite opinion that fiscal decentralization suppresses green development. Wang et al. [25] explored the synergistic effects of fiscal decentralization and green innovation on environmental quality improvement. Their empirical studies found that fiscal decentralization inhibited environmental quality and aggravated environmental pollution. However, the synergistic effects of fiscal decentralization and green innovation on environmental quality were significantly positive, and showed regional heterogeneity. Zhang et al. [26] explored the effects of fiscal decentralization on carbon emissions, and their empirical results showed that fiscal decentralization promoted CO₂ emissions and aggravated environmental pollution. Zhu et al. [27] empirically found that fiscal decentralization inhibited green innovation at the provincial level.

In summary, the previous literature has not come to a consistent or consensus conclusion regarding the complex relationship between fiscal decentralization and green development, and most scholars have discussed the impacts of fiscal decentralization on environmental pollution and the efficiency of green innovation at the provincial level. As a micro-economic actor that contributes to regional economic development, corporate green technology innovation remains the driving force for regional green development. Yet little literature has explored the impacts and mechanisms of fiscal decentralization and corporate green technology innovation at the micro level. Considering this, it remains desirable to explore the main effects of fiscal decentralization on corporate green technology innovation through further research.

2.2. Taxation Efforts

Firstly, tax incentives and tax reduction efforts are recognized as important ways for provincial governments to participate in tax competition in China. For instance, changing taxation efforts is a usual method that many provincial governments employ [28]. Genschel and Schwarz [29] believe that provincial governments participate in wasteful competition for scarce capital by changing taxation efforts and public expenditure levels; thus, the core of taxation efforts can affect the optimal social levels of public goods, including environmental or green innovation development, provided by provincial governments. Secondly, the extant literature has explored the impacts of taxation efforts on green development from the perspectives of environmental pollution and green innovation efficiency by studying the behavior of provincial governments. However, the findings have been inconsistent. The first perspective suggests that taxation efforts can promote green innovation development relationships. Zong and Yang [30] constructed a model of taxation efforts, capital flow and environmental pollution, in order to investigate the relationships between regional competition, taxation efforts and environmental pollution. Their results showed that provincial governments reduced their efforts to attract capital income; thus, raising their taxation efforts could reduce total pollution emissions. Deng et al. [31] explored the relationships between taxation efforts and the necessary means of tax competition and green technology innovation. Their empirical results showed that the competition between income tax and environmental tax had an inverted U-shaped effect on green technology innovation, due to the changing environmental regulations of provincial governments and the energy-saving and emission reduction behavior of corporations. The second perspective holds that taxation efforts are not conducive to green development. Based on a background of fiscal decentralization, Bai et al. [16] explored tax competition (via reducing taxation efforts), and found that it had negative influences on local environments and environmental quality. Additionally, financial pressure distorted the fiscal preferences of local governments, making them race to lower the thresholds of environmental protection.

In summary, the previous literature found that taxation efforts can affect regional green development by changing the optimal social levels of public goods and other provincial governmental behaviors. However, although there is a complex relationship between taxation efforts and green development, few studies have discussed the impacts of taxation efforts on green development in terms of objective fiscal systems and the subjective behavior of provincial governments.

Overall, the extant literature has investigated the impacts of fiscal decentralization and taxation efforts on green development, which provides important support for our theoretical understanding of the factors that influence green innovation and development. However, the extant literature still has some limitations. Firstly, the research of extant studies mostly discussed the two influencing factors in isolation, i.e., when analyzing the impact of fiscal decentralization on green development, the impact of taxation efforts has been neglected or ignored, and vice versa. Fiscal decentralization remains an objective fiscal system, while taxation efforts are manifested as the subjective tax competition behavior of provincial governments against a background of fiscal systems and economic development. Thus, are there any synergistic effects of these two factors on corporate green technology innovation? What are the influential mechanisms? Secondly, although the extant literature has discussed the influencing factors of green innovation development based on green innovation indicators at the provincial level, studies have neglected the potential effects of the heterogeneity of corporate micro-subjects, and the endogenous effects caused by uneven economic development. The extant studies show that the impacts of fiscal decentralization on regional economic growth, government efficiency and regional innovation efficiency vary with the stage of regional economic development [32], the nature of the industry [33], and the nature of the corporation [34]. Thus, it is necessary to discuss the influencing factors of green technology innovation at the corporate level.

Based on the above analysis, this paper supplements the current research on the fiscal decentralization system and its impact on corporate green technology innovation by focusing on the synergistic effects of fiscal decentralization and provincial government taxation efforts on corporate green technology innovation. Considering the heterogeneity of regions and corporations, we used IPC technology to reflect corporate green technology innovation. Regional development, the nature of the industry and the nature of the corporation were integrated into the research model, in order to test whether and how the synergistic effects of fiscal decentralization and taxation efforts affected corporate green technology innovation.

3. Theoretical Analysis, Research Assumptions and Theoretical Framework

3.1. Fiscal Decentralization and Corporate Green Technology Innovation

Although the extant literature has not drawn consistent conclusions on how fiscal decentralization affects regional green innovation, fiscal decentralization plays a positive role in promoting corporate green technology innovation. Since fiscal decentralization always symbolizes the fiscal autonomy that is actually possessed by a certain level of government [35], this paper illustrates that fiscal decentralization has an impact on corporate green technology innovation by affecting the behavior of provincial governments, based on new structural economic theory (NSE) and the “Tiebout hypothesis”.

On the one hand, when rethinking structural economics, Lin [36] believed that economic development is a dynamic process, which requires not only a market allocation of resources, but strong “hard and soft” power within the industrial upgrading policies and infrastructure construction provided by provincial governments. Generally, provincial governments play pivotal roles in the sustainable development of regional economies. With improvements in fiscal decentralization and autonomy, the higher the degree of fiscal and financial power that provincial governments enjoy, the stronger their sense of responsibility toward fiscal decision-making and policy implementation [23]. Thus, it becomes a greater possibility that provincial governments make economic policies in accordance with the natural endowment structures of their regions, and it also becomes more likely that provincial governments formulate development strategies with comparative advantages to improve the welfare of residents and promote high quality regional development. In line with development strategies with comparative advantages, provincial governments can incorporate green innovation development into provincial development strategies in a planned and targeted manner. Furthermore, as a vital tool for provincial governments to intervene in the development of enterprises, the amount of government grants is bound to increase with an increase in fiscal decentralization [37], consequently promoting corporate green technology innovation. At the same time, provincial governments can select corresponding industries and corporations according to the comparative advantage development strategy, and provide targeted support for green technology innovation. For example, higher fiscal green expenditure can be used to motivate corporate green technology innovation. Corporate green technology innovation is conducive to alleviating resource-based and environmental constraints of regional development, significantly boosting the sustainable protection of the environment, which, in turn, promotes corporate green technology innovation.

On the other hand, pronounced differences exist between the provinces of China in terms of resource endowments and industrial structures; hence, provincial governments can only formulate policies that meet provincial development strategies by fully grasping the resource endowment, economic development status and residents’ needs of each region [38]. In this situation, if the degree of fiscal decentralization is low, then the central government can directly formulate sustainable development strategies for each region. However, due to information asymmetry, excessive implementation costs and other limitations, it is not certain that the central government can develop sustainable development strategies with high efficiency and effects. Thus, compared to the central government, provincial governments have more advantages in terms of regional information, and can better understand the preferences of the residents in their jurisdictions [39,40]. With high fiscal decentralization, the central government can grant provincial governments more autonomy to provide public goods and public infrastructures, including green technology innovation [41]. Correspondingly, this would provide an adequate supply of public goods for the development of regional green innovation activities and better hardware facilities that would lay the foundation for corporations to engage in green technology innovation activities, thus promoting corporate green technology innovation.

In summary, fiscal decentralization promotes corporate green technology innovation through the following two aspects: provincial governments incorporating green technology innovation into development strategies with comparative advantages, and improving the provision of public goods for green technology innovation. Thus, we hypothesized the following:

Hypothesis 1.

Fiscal decentralization plays a positive role in promoting corporate green technology innovation.

3.2. Taxation Efforts and Moderating Effects

As illustrated above, fiscal decentralization can promote corporate green technology innovation by acting on the development strategies of provincial governments, and by exploiting information advantages. Furthermore, this positive relationship is likely affected by the subjective behavior of provincial governments in terms of their taxation efforts. Taxation efforts can affect this relationship by making provincial governments carefully formulate and implement development strategies with comparative advantages. Previous studies have shown that taxation efforts are a necessary means used by provincial governments to participate in tax competition [42], which affect the optimal social levels of public goods, including the environment [16]. Thus, taxation efforts can inevitably affect the provision and efficiency of public goods from provincial governments, and the implementation of advantageous development strategies.

In regions with high taxation efforts, although the tax burdens on corporations’ increase, provincial governments can reward those corporations with “environmentally friendly and high green innovation” by means of tax incentives, financial subsidies and increased financing channels. These benefits help corporations to maintain relatively loose cash flow, and reduce financial constraints [43]. According to the principle of “marginal benefits”, compared to the increased tax burdens, the favorable conditions for corporate green technology innovation can help corporations to achieve long-term and sustainable development. Thus, corporations are willing to invest more capital and elements into innovation, in order to attain more green technology innovation. Simultaneously, higher taxation efforts also raise the entry thresholds for polluting corporations [44], thereby crowding out those corporations with “heavy pollution, less environmental protection and less green innovation”. Provincial governments are prone to introducing and encouraging corporations with “environmental protection and green innovative development” that match the local industrial structures and resource endowments.

Conversely, in regions with moderate taxation efforts, provincial governments can engage in wasteful competition for assets and liquid resources, such as the environment and green innovation [29], and distort the direction of local public spending [45] by reducing taxation efforts. As a result, provincial governments are not able to provide development strategies with comparative advantages. When creating development strategies, provincial governments may ignore the resource endowments, environmental protection and green innovation in their regions, and they may also introduce corporations with “low-tech, non-environmentally friendly” values, which do not attach great importance to sustainable development or green innovation. Consequently, this causes a “crowding-out effect” on corporations that have long valued environmental protection and green innovation, and triggers a “bottoming-out” of industrial structures [46,47,48], thus weakening the role of fiscal decentralization in promoting corporate green technological innovation. Thus, we hypothesized the following:

Hypothesis 2.

The synergistic effects of fiscal decentralization and taxation efforts play positive roles in promoting corporate green technology innovation.

3.3. Heterogeneity Analysis

3.3.1. Regional Economic Development

The synergistic effects of fiscal decentralization and taxation efforts on corporate green technology innovation vary with regional economic development. Regional heterogeneity also varies in terms of the impact of fiscal decentralization and taxation efforts on environmental quality [48]. Thus, we further divided the total sample into three sub-samples consisting of the eastern region, the central region and the western region, in order to examine fiscal decentralization in each area. In the relatively developed eastern region, economic growth has crossed into the extensive development stage of “high factor input, sacrificing environmental protection” [49]. Provincial governments formulate comparative advantage development strategies based on resource endowments and potential advantages. With improvements in the degree of fiscal decentralization, the more self-owned funds and autonomy that provincial governments have, the more attention they pay to scientific and technological innovation as a sustainable driving force for economic development under the conditions of sufficient fiscal revenue [50]. At the same time, with improvements in provincial government taxation efforts, the taxation efforts not only guarantee fiscal revenue [28], but also raise environmental protection thresholds [44] and squeeze out corporations with high factor inputs that sacrifice environmental protection. This supports provincial governments in creating development strategies with comparative advantages, and stimulates improvements in corporate green innovation. On the contrary, fiscal decentralization has incentivized provincial governments in the central and western regions to “compete for economic growth”, and incorporated the positions of provincial governments as “rational people”, resulting in improvements in fiscal decentralization and insignificant promotion of green innovation development in the areas under their jurisdiction. Thus, we hypothesized the following:

Hypothesis 3.

The synergistic effects of fiscal decentralization and taxation efforts have more pronounced roles in promoting corporate green technology innovation in the eastern region.

3.3.2. Corporate Property Rights

The synergistic effects of fiscal decentralization and taxation efforts on corporate green technology innovation vary, depending on property rights. As SOEs and non-SOEs have various characteristics and advantages within corporate green technology innovation, the natures of corporate property rights have different impacts on corporate green technology innovation [51]. Under the fiscal decentralization system, provincial governments have a strong incentive to use various fiscal policies to promote green technology innovation, in order to shoulder the responsibility of environmental protection within their jurisdictions; thus, this creates a unique relationship between the government and the market [52]. This means that the behavior of provincial governments not only influences market responses, but also the efficiency of infrastructure development and financial support; this, in turn, influences the investment decisions of corporations. In terms of infrastructure construction efficiency, provincial governments publish their spending on green and innovative infrastructures, and this information is transmitted to the market and stimulates corporate demand. Compared to SOEs, the various investment decisions of non-SOEs are more strongly influenced by market responses. They tend to take advantage of the “timing effect” to increase their investments in corporate green technology innovation, and accelerate their green technology innovation in response to external green innovation infrastructure improvements.

In terms of financial subsidies, under the pressure of green development, provincial governments give priority to the increasing market demand for green innovation through financial subsidies for credit, taxes and other factors [53]. As the degree of fiscal decentralization increases, provincial governments are able to weaken financing conditions and fiscal subsidies due to different property rights. Schumpeter’s theory of innovation argues that financial support plays an indispensable role in the promotion of corporate innovation [54,55]. The optimization of financing conditions and financial support is conducive to motivating non-SOEs to make faster and more effective investment decisions regarding green innovation, thereby promoting corporate green technology innovation. Although SOEs naturally enjoy more favorable financing environments [56], the existence of soft constraints within SOEs may restrict their investment decision spaces. Moreover, most SOEs are large, and have complicated operations; thus, the efficiency of their investment decisions is slower compared to non-SOEs, which is unconducive to green innovation within SOEs. In addition, increases in taxation efforts can ensure tax revenue that allows provincial governments to provide infrastructure construction projects and financial subsidies, and to raise the entry barriers for green innovation corporations. Based on the above analysis, the synergistic effects of fiscal decentralization and taxation efforts are more significant in promoting green technology innovation among non-SOEs. Thus, we hypothesized the following:

Hypothesis 4.

The synergistic effects of fiscal decentralization and taxation efforts are more pronounced in promoting green technology innovation in non-SOEs.

3.3.3. Industry Characteristics

The synergistic effects of fiscal decentralization and taxation efforts on corporate green technology innovation vary from industry to industry. The manufacturing industry is the key industry in China, and is also the primary source of environmental pollution, which remains a key and delicate point in China’s green transformation [57]. With increased fiscal decentralization and the increased responsibility for environmental protection taken on by provincial governments, green technology innovation within the manufacturing sector is a focal point for provincial governments to strengthen environmental governance and accelerate green technology innovation. The manufacturing industry accepts its enormous responsibility for environmental and green innovation [58], and with the fact that green technology innovation is more urgently needed to improve green production [59], this results in greater incentives for green technology innovation. Furthermore, as provincial governments increase their taxation efforts, they correspondingly increase the barriers of entry for non-green innovative manufacturing corporations, as well as the overall tax burdens on the manufacturing industry, which lacks government financial support for green technology innovation. The synergistic effects of fiscal decentralization and taxation efforts “push” the manufacturing industry toward green innovation. Thus, we hypothesized the following:

Hypothesis 5.

The synergistic effects of fiscal decentralization and taxation efforts are more pronounced in promoting green technology innovation within the manufacturing industry.

3.4. Theoretical Framework

Based on our analysis of the conceptual relationships between fiscal decentralization, taxation efforts and corporate green technology innovation, we established the theoretical framework of these relationships above, as shown in Figure 1. According to this framework, firstly, fiscal decentralization can promote corporate green technology innovation. Secondly, the synergistic effects of fiscal decentralization and taxation efforts can play positive roles in promoting corporate green technology innovation. Finally, the synergistic effects of fiscal decentralization and taxation efforts can vary by regional economic development status, the nature of firm ownership and the nature of the industry. In turn, this can promote corporate green technology innovation in eastern China, non-SOEs and in the manufacturing industry.

4. Materials and Methods

4.1. Data Sources and Sample Selection

The firm-level data in this study were obtained from the China Stock Market & Accounting Research (CSMAR) database, and from the Chinese Research Data Services (CNRDS). The corporate green patent data came from the World Intellectual Property Organization (WIPO). The province-level data came from the China Statistical Yearbook, the China Urban Statistical Yearbook and the China Fiscal Statistical Yearbook.

To ensure the effectiveness and accuracy of our research findings, we screened our sample according to the following criteria: (1) we eliminated observations with missing key variables; (2) we eliminated firms whose green patent data were zero from 2005 to 2019; (3) we excluded ST and ST* corporations; (4) all continuous variables were winsorized at the 5~95% quantiles. Ultimately, 10,688 observations were obtained from sample firms across 31 Chinese provinces.

4.2. Variable Measurement

4.2.1. Dependent Variable Measurement

We drew on the research of Qi et al. [56] to measure corporate green technology innovation, using green patent authorizations. The authorizations of corporate green patents are more conducive to reflecting the actual innovation ability of corporations in the current period than other applications. Meanwhile, we drew on the research of Hong et al. [51] to screen corporate green patents using the automated “IPC Green Inventory” tool launched by the WIPO, which identifies and calculates the number of green innovation patent authorizations and green utility patent authorizations at the IPC group level. Ultimately, natural logarithms were used to calculate the sum of these two measurements, which was then used as the core measure of corporate green technology innovation capability.

4.2.2. Independent Variable Measurement

We drew on the research of Chen and Gao [35] to measure fiscal decentralization (FD), using the degree of fiscal decentralization autonomy. The equation for fiscal decentralization is as follows:

(1)$Fiscal Decentralization=\frac{Provincial fiscal revenue per capita}{Provincial fiscal expenditure per capita}$

Currently, the main metrics in the literature include fiscal revenue decentralization, fiscal expenditure decentralization and fiscal autonomy. We adopted fiscal autonomy for following reasons: firstly, fiscal autonomy was analyzed from the perspective of time series and limited panel data. Secondly, fiscal autonomy could better reflect the process of changes in fiscal decentralization, and the fiscal relationship between the central and provincial governments.

4.2.3. Moderating Variable Measurement

We followed the research of Wei and Lu [42] to measure taxation efforts (Effort) using the ratio of actual tax revenue (Tax) to potential tax revenue (Tax^∧). The equation for taxation efforts (Effort) is as follows:

(2)$Effort=\frac{Tax}{Tax\wedge }$

Potential tax revenue was measured using the tax “authority method”. In this study, the provincial actual tax revenue ratio (actual tax revenue/GDP), standardized economic development level (LnGDP), openness to the external world (total import and export/GDP), population density (permanent population/land area of each province and city), proportion of secondary industries (secondary industry added value/GDP), proportion of tertiary industries (tertiary industry added value/GDP) and urbanization rate (urban population/total population) were used as explanatory variables, in order to construct a fixed effects model to estimate the expected tax capacity of each province and region. In addition, the tax capacity of each province and region was then fitted on the basis of regression results to finally estimate the taxation efforts of each province and region.

4.2.4. Control Variables

Considering the internal and external factors that affect corporate green technology innovation, we selected a series of influencing factors at the firm and provincial levels to use as control variables. The variables at the firm level included corporation size (Size), corporate debt ratio (Lev), return on combined assets (Roa) and firm age (FirmAge), as well as the proportion of independent directors (Indep) and industry differences (Indu). The provincial level variables included foreign investment shares (LnFDI), GDP growth rate (LnGDP) and environmental regulations (LnSO₂). In addition, to control the systematic impacts of changes over time across firms and industries, we added t (Year), i (Firm) and t (Year) × ind (Industry) dummy variables. The variable definitions are shown in Table 1.

4.3. Model Setting

Except for the above control variables affecting corporate green technology innovation, we should also pay attention to unexamined influencing factors, including the impact of time, individual enterprises and year-industry. We drew on Flannery and Rangan [60] to use a fixed effects model to test the above hypothesis. In addition, to mitigate the influences of heteroscedasticity and sequence correlation errors in the regression, the standard errors were clustered at the provincial level in all regressions.

4.3.1. Fiscal Decentralization and Corporate Green Technology Innovation

To test whether fiscal decentralization could affect corporate green technology innovation, we constructed an empirical model, as follows:

(3)$Lngr{e}_{i,t}={\alpha }_0+{\alpha }_{1}F{D}_{i,t}+\Sigma {\alpha }_{i}Control{s}_{i,t}+{\mu }_t+{\mu }_i+{\mu }_t*{\mu }_{ind}+{\epsilon }_{i,t}$

where i and t represent the firm and year, respectively; $Lngr{e}_{i,t}$ indicates the corporate green technology innovation of firm i in year t; $Control{s}_{i,t}$ represent the series of control variables (including Size, Lev, Roa, Indep, Tobinq, LnFDI, LnGDP and LnSO₂); ${\alpha }_0$ is the constant term of the regression model; ${\alpha }_1$ is the coefficient of the independent variable to be estimated; ${\epsilon }_{i,t}$ is a random interference item that could prevent missing variable errors; ${\mu }_t$ and ${\mu }_i$ indicate the fixed effects of year and firm, respectively; and ${\mu }_t*{\mu }_{ind}$ represents the fixed effect of the t × ind variable. The inclusion of these three fixed effects is widely used to estimate causal effects in panel data because it can assuage the confounding effects of firm-specific characteristics, time trends and industrial changes over time on the results.

4.3.2. The Moderating Effects of Taxation Efforts

In order to test the moderating effects of taxation efforts in the relationship between fiscal decentralization and corporate green technology innovation, we constructed an empirical model, as follows:

(4)$\begin{array}{c}Lngr{e}_{i,t}={\beta }_0+{\beta }_{1}F{D}_{i,t}+{\beta }_{2}Effor{t}_{i,t}+{\beta }_{3}F{D}_{i,t}*Effor{t}_{i,t}+\Sigma {\beta }_{i}Control{s}_{i,t}\\ +{\mu }_t+{\mu }_i+{\mu }_t*{\mu }_{ind}+{\epsilon }_{i,t}\end{array}$

where $Effor{t}_{i,t}$ indicates the taxation efforts of firm i in year t, and $F{D}_{i,t}*Effor{t}_{i,t}$ is the relationship between fiscal decentralization and taxation efforts, which indicates the impact of fiscal decentralization on corporate green technology innovation under the moderating effects of taxation efforts. The definitions of the other terms are consistent with the previous section.

4.4. Descriptive Statistics

The descriptive statistics of the main variables are presented in Table 2. For corporate green technology innovation (Lngre), the mean value was 0.642 and the median was 0. The mean was greater than the median, and the distribution of green patents was skewed to the right, indicating that the general level of corporate green technology innovation in China was not high [61]. The minimum value of fiscal autonomy (FD) was 0.368, the maximum value was 0.895 and the standard error was 0.178, indicating that there were differences in the degree of fiscal decentralization across the country. The mean value of taxation efforts (Effort) was 0.996, the maximum value was 1.131 and the standard error was 0.075, indicating that the tax collection agencies in the corporate sample basically achieved extensive collection of tax receivables. However, in terms of standard deviation, massive differences existed between the taxation efforts of various provinces.

5. Regression Results and Robustness Checks

5.1. Regression Results

5.1.1. Fiscal Decentralization and Corporate Green Technology Innovation

In accordance with the baseline model, this section empirically examines the relationship between fiscal decentralization and corporate green technology innovation at the firm level, and the results are presented in Table 3. In Column (2), we added the control variables of corporate characteristics and regional characteristics. The results showed that the coefficient of fiscal decentralization on corporate green technology innovation was positive and significant at the 5% level, indicating that fiscal decentralization had a significant impact on corporate green technology innovation. Thus, Hypothesis 1 was supported, and this empirical result was in line with that of Zhou et al. [22] and Chi et al. [24]; that is, it supports that fiscal decentralization can promote corporate green technology innovation. The creation of development strategies with comparative advantages by provincial governments could make use of the increased degree of fiscal decentralization to significantly promote the levels of corporate green technology innovation.

5.1.2. The Moderating Effects of Taxation Efforts

In addition, Table 3 shows the results of the moderating effects of fiscal decentralization on corporate green technology innovation, from the perspective of taxation efforts. Column (3) shows these results without controlling for the corporate or regional characteristics. The regression coefficient of the relationship between fiscal decentralization and taxation efforts was positive and significant at the 5% level. Then, the control variables of corporate characteristics and regional characteristics were added to the model, and the results are shown in Column (4). The impact of fiscal decentralization on corporate green technology innovation was positive and significant at the 1% level, indicating that fiscal decentralization played a significant role in promoting corporate green technology innovation. Thus, Hypothesis 2 was supported; that is, the subjective choice of provincial governments’ taxation efforts will affect the role of fiscal decentralization in promoting corporate green technology innovation by changing the comparative advantage development strategy of local governments and the provision of public goods. Furthermore, we also provide theoretical support for supporting the influence of taxation efforts on local government behaviors [16].

5.1.3. Regional Economic Development

The results of the effects of fiscal decentralization varied according to regional economic development status. According to the natural conditions and resources, China’s mainland regions could be divided into three vital economic regions: the eastern region, the central region and the western region. The results are shown in the first three columns of Table 4. The coefficient of the relationship between fiscal decentralization and taxation efforts was positive and significant at the 1% level in the eastern region, unlike in the central and western regions, indicating that the synergistic effects of fiscal decentralization and taxation efforts promoted corporate green technology innovation in the eastern region. Thus, Hypothesis 3 was supported. In the economically developed eastern region, the subjective choice of provincial governments and the objective fiscal system were not limited by the extensive development stage of “high factor input, sacrificing environmental protection” [49]. Therefore, improvement in taxation efforts and the level of fiscal decentralization ensured improvements in tax revenue and fiscal control, thereby promoting corporate green technology innovation.

5.1.4. Corporate Property Rights

The results of the effects of fiscal decentralization varied according to the property rights of the corporations. In this empirical test, SOEs and non-SOEs were classified according to the nature of their property rights. Results of the sub-sample regressions are shown in Columns (4) and (5) in Table 4. The coefficient of the relationship between fiscal decentralization and taxation efforts was positive and significant at the 10% level in the non-SOE sample, unlike in the SOE sample, indicating that the synergistic effects of fiscal decentralization and taxation efforts promoted green technology innovation in non-SOEs. Thus, Hypothesis 4 was supported; that is, the heterogeneity of corporate property rights affected the synergy of fiscal decentralization and taxation efforts on corporate green technology innovation. The synergy of these indirectly influenced “market winds”, by influencing the behaviors of local governments [52]. Non-SOEs with sensitive “market winds” made green innovation decisions that catered to the market according to the market wind, thereby promoting improvements in the level of corporate green technology innovation.

5.1.5. Industry Characteristics

The results of the effects of fiscal decentralization varied according to the nature of the industry. In this empirical test, the sample was split into manufacturing corporations and non-manufacturing corporations, according to the industry. The results of the sub-sample regressions are shown in Columns (6) and (7) in Table 4. The coefficient of the relationship between fiscal decentralization and taxation efforts was positive and significant at the 5% level in the manufacturing group, indicating that the synergistic effects of fiscal decentralization and taxation efforts promoted green technology innovation in manufacturing corporations. Thus, Hypothesis 5 was supported; that is, the synergy of fiscal decentralization and taxation efforts placed a huge responsibility on green innovation in the manufacturing industry [58], which in turn promoted corporate green technology innovation among manufacturing enterprises.

5.2. Robustness Checks

To ensure the robustness of the above findings, we conducted tests using the instrumental variable method, replacing key variables and using alternative model regression.

5.2.1. Instrumental Variable Method

To alleviate endogeneity issues presented in this paper, this robustness estimation was conducted using the panel data instrumental variable method. We drew on the research of Lo et al. [62] to select the instrumental variables using the lagged terms of the endogenous variables. Table 5 shows the results. In the first stage, the coefficients of the instrumental variables were significant at the 5% level, indicating that the instrumental variables correlated with the endogenous variables, i.e., the preconditions for the relevance of the instrumental variables were satisfied, and the instrumental variables were valid. In the second stage, the results were consistent with the baseline results. This indicated that after considering endogeneity issues, the increase in fiscal decentralization still promoted corporate green technology innovation, thereby enhancing the reliability of the baseline empirical findings.

5.2.2. Replacing Key Variables

To reduce possible interference from the selection of different fiscal decentralization indicators in the research findings, we drew on the research of Jia et al. [63] and Wu et al. [64], and used fiscal revenue decentralization and fiscal expenditure decentralization as proxy variables for fiscal decentralization, in order to empirically test the impacts on corporate green technology innovation. Table 6 presents the results. The results of the fiscal revenue decentralization were consistent with the previous findings. The regression results that corresponded to the fiscal expenditure decentralization showed that only the fiscal expenditure decentralization lagging two periods promoted corporate green technology innovation, which was consistent with the previous conclusions; however, the synergy between taxation efforts and fiscal expenditure decentralization did not play a significant role in promoting corporate green technology innovation. This was mainly because the improvements in taxation efforts were more from the perspective of reducing the pressure of tax competition to promote fiscal decentralization, via the promotion of corporate green technology innovation instead of promoting green expenditure.

5.2.3. Alternative Model Regression

To avoid bias in the estimation results from the two-way fixed effects model, we drew on the research of Carson and Sun [65] and used a random effects panel to conduct a robustness test, considering that the number of green patents granted by corporations had a large number of stacked zero values, and the positive values were mostly concentrated in one. The results are shown in Table 7, and were broadly consistent with the previous findings, further validating the robustness of our results.

6. Conclusions and Policy Recommendations

6.1. Conclusions

This paper explored the effects of fiscal decentralization on corporate green technology innovation and the moderating effects of taxation efforts on the relationship, using a fixed effects model that was based on new structural economics. We found the following: (1) fiscal decentralization played a significant role in promoting corporate green technology innovation, on the whole, from the perspective of new structural economics and the “Tiebout hypothesis”; (2) based on taxation efforts affecting the behaviors of provincial governments, this study investigated the moderating effects of taxation efforts on the relationship between fiscal decentralization and corporate green technology innovation; we found that the synergy effects of fiscal decentralization and taxation efforts were strongly positive, implying a substantial promotion of corporate green technology innovation; (3) to further explore the synergy effects of fiscal decentralization and taxation efforts, this paper analyzed heterogeneity based on regional economic development, corporate property rights and heterogeneity of industry. This study found that the synergistic effects of fiscal decentralization and taxation efforts were more significant in promoting corporate green technology innovation in eastern China, in non-SOEs, and in manufacturing corporations.

6.2. Policy Recommendations

The main findings of this paper imply several policy recommendations. Firstly, provincial governments should be granted more fiscal autonomy to further reform the fiscal decentralization system of the central government. When increased fiscal autonomy is secured, provincial governments tend to be more responsible in formulating and implementing green development strategies. Provincial governments can also facilitate the flow and allocation of funds toward greener and more environmentally friendly areas, recruit environmentally friendly industries and enterprises, and support green technology innovation projects, which contribute to increasing corporate green technology innovation.

Secondly, taxation efforts and tax competition strategy should be optimized and adjusted by provincial governments, in order to promote long-term effects of fiscal decentralization on corporate green technology innovation. The following necessary measures include: (1) as provincial tax revenue increases, provincial governments should increase spending on protecting the local environment, and on supporting green innovation, and allocate more funds toward environmental protection and green innovation development areas with micro-corporations that promote the long-term development of environmental protection and the economy; (2) provincial governments should reduce or avoid competitive taxation practices. On the one hand, taxation efforts should be increased to raise the entry thresholds for polluting corporations; on the other hand, provincial governments should increase their taxation efforts on the basis of a series of incentives, such as tax concessions and financial subsidies for specific green development areas where there are corporations with “innovative and environmentally friendly” values and other sustainable development approaches.

Thirdly, the central government should formulate differentiated fiscal policies that consider the effects of heterogeneity factors. In the eastern region, the central government should formulate supportive regulatory and assessment measures, while increasing the financial autonomy of provincial governments to ensure that provincial governments make use of the “dividends” from fiscal decentralization. In the central and western regions, the central government should improve the innovation management capacity of provincial governments and strengthen the innovation awareness of corporations, in order to prevent fiscal decentralization from inhibiting corporate green technology innovation. Furthermore, provincial governments should formulate targeted plans for SOEs and non-manufacturing corporations to give full play to the green functions of fiscal decentralization, under the conditions of different ownership and industries. For instance, it is imperative to alleviate the current difficulties and financial constraints regarding green financing for private corporations.

6.3. Limitation and Future Studies

This paper still has some limitations, which makes future study possible. First, we only used the quantity of green patents to indicate the level of corporate green technology innovation; this ignored the fact that the innovation activities of individual enterprises are the by-products of their pursuit to maximize their own economic interests. However, the level of corporate green technology innovation included not only the quantity of green patents, but also the quality of green patents under the environmental responsibility system. Future studies could consider using the quality of green patents to indicate corporate green technology innovation, which would help find the root causes of the low levels of corporate green technology innovation occurring in China. Second, this paper only centered on the moderating effect of taxation efforts from provincial governments. Future research could improve our paper by exploring other boundary conditions, including green taxation system or environmental regulation, and so on, either from provincial governments or city governments.

Author Contributions

Conceptualization, X.H. and X.Z.; methodology, X.H.; software, X.H.; validation, X.Z. and F.W.; formal analysis, X.Z. and F.W.; resources, X.H.; data curation, X.H.; writing—original draft, X.H. and X.Z.; writing—review and editing, X.Z. and F.W.; supervision, X.Z. and F.W.; funding acquisition, X.Z. and F.W. All authors have read and agreed to the published version of the manuscript.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Data are available from the public sources cited in the text and include: China Stock Market & Accounting Research (CSMAR) (upenn.edu); Chinese Research Data Services (https://www.cnrds.com/ (accessed on 26 April 2022)); WIPO—World Intellectual Property Organization; China Statistical Yearbook (https://data.cnki.net/ (accessed on 26 April 2022)); China Urban Statistical Yearbook (https://data.cnki.net/ (accessed on 26 April 2022)); China Fiscal Statistical Yearbook (https://data.cnki.net/ (accessed on 26 April 2022)).

Conflicts of Interest

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Figure and Tables

Figure 1. Theoretical framework.

Table 1

Variable definitions.

Variable Type	Variable Symbol	Variable Definitions
Dependent Variable	Lngre	Using the annual number of corporate green patent authorizations as a variable for corporate green technology innovation.
Independent Variables	FD	Provincial fiscal revenue per capita/Provincial fiscal expenditure per capita.
	FD2	Provincial fiscal revenue per capita/(Provincial fiscal revenue per capita + central fiscal revenue per capita).
	FD3	Provincial fiscal expenditure per capita/(Provincial fiscal expenditure per capita + central financial expenditure per capita).
Moderating Variable	Effort	Actual tax revenue (Tax)/Potential tax revenue (Tax∧)
ControlVariables	Size	The natural logarithm of total assets.
	Lev	Total liabilities divided by total assets.
	Roa	The return on total assets.
	FirmAge	Firm age.
	Indep	The proportion of independent directors.
	Indu	The proportion of output value of the secondary industry.
	LnFDI	The proportion of foreign investment at the provincial level is treated in a logarithmic manner.
	LnGDP	GDP growth rate is treated in a logarithmic manner.
	LnSO2	Sulfur dioxide emissions (SO2) per unit of economic output at the provincial level are treated logarithmically.
	Firm	Firm control variables control the impact of firm differences.
	Year	Time control variables control the impact of annual differences.
	Year×Industry	Year-industry control variables control the impact of Year × Industry differences.

Table 2

Descriptive statistics of main variables.

Variable	N	P10	P50	P90	S.D.	Min	Max	Mean
Lngre	10,688	0	0	2.079	0.834	0	2.639	0.642
FD	10,688	0.404	0.732	0.876	0.178	0.368	0.895	0.672
Effort	10,688	0.899	0.991	1.100	0.075	0.853	1.131	0.996
Size	10,688	−0.094	1.178	3.241	1.211	−0.348	3.988	1.383
Lev	10,688	0.146	0.422	0.689	0.193	0.104	0.753	0.421
Roa	10,688	0.002	0.044	0.113	0.045	−0.045	0.139	0.048
Indep	10,688	0.333	0.333	0.431	0.044	0.333	0.455	0.371
FirmAge	10,688	2.079	2.708	3.135	0.361	1.946	3.219	2.682
Indu	10,688	0.318	0.454	0.525	0.086	0.213	0.550	0.438
LnGDP	10,688	−2.766	−2.316	−1.724	0.385	−3.077	−1.617	−2.303
LnFDI	10,688	−4.259	−3.663	−3.087	0.491	−4.826	−2.846	−3.711
LnSO2	10,688	1.109	2.660	4.044	1.102	0.582	4.523	2.598

Table 3

Regression results.

Variable	Corporate Green Technology Innovation
	(1)	(2)	(3)	(4)
FD	0.452 *	0.505 **	0.462 *	0.533 **
	(0.264)	(0.225)	(0.266)	(0.222)
Effort			0.027	0.067
			(0.092)	(0.105)
Effort×FD			1.001 **	1.409 ***
			(0.483)	(0.484)
Size		0.086 ***		0.086 ***
		(0.028)		(0.028)
Lev		0.028		0.027
		(0.111)		(0.111)
Roa		−0.369		−0.368
		(0.272)		(0.274)
Indep		0.119		0.123
		(0.256)		(0.255)
FirmAge		0.114		0.118
		(0.097)		(0.098)
Indu		0.524		0.623
		(0.495)		(0.497)
LnGDP		−0.049		−0.059 **
		(0.030)		(0.028)
LnFDI		−0.006		−0.016
		(0.027)		(0.031)
LnSO2		−0.009		0.009
		(0.032)		(0.034)
Controls	NO	Y	NO	Y
Year	Y	Y	Y	Y
Firm	Y	Y	Y	Y
Year×Industry	Y	Y	Y	Y
Observations	10,688	10,688	10,688	10,688
Adjusted R2	0.171	0.175	0.171	0.176

Note: ***, ** and * indicate significance at the levels of 1%, 5% and 10%, respectively; the standard errors in parentheses are clustered at the provincial level.

Table 4

Heterogeneity analysis.

Variable	Corporate Green Technology Innovation
	(1) Eastern Region	(2) Central Region	(3) Western Region	(4) SOE	(5) Non-SOE	(6) Manuf-acturing	(7) Non-Manufacturing
FD	0.786 **	−0.257	0.262	0.205	0.506 *	0.604 **	−0.042
	(0.271)	(0.531)	(0.235)	(0.318)	(0.267)	(0.232)	(0.682)
Effort	−0.048	0.648	0.219	−0.070	0.115	0.066	−0.048
	(0.264)	(0.530)	(0.660)	(0.231)	(0.116)	(0.112)	(0.269)
Effort × FD	2.623 ***	2.645	1.691	0.887	1.143 *	1.709 **	0.556
	(0.616)	(1.523)	(2.697)	(0.914)	(0.634)	(0.648)	(1.455)
Controls	Y	Y	Y	Y	Y	Y	Y
Year	Y	Y	Y	Y	Y	Y	Y
Firm	Y	Y	Y	Y	Y	Y	Y
Year × Industry	Y	Y	Y	Y	Y	Y	Y
Observations	6543	2573	1572	3706	6982	8386	2153
Adjusted R2	0.180	0.259	0.203	0.300	0.122	0.160	0.247

Note: ***, ** and * indicate significance at the levels of 1%, 5% and 10%, respectively; the standard errors in parentheses are clustered at the provincial level.

Table 5

Robustness check: instrumental variable method.

Variable	FD	Corporate Green Technology Innovation
	(1)	(2)
FDt-2	0.390 ***
	(0.132)
FD		2.451 **
		(0.646)
Controls	Y	Y
Year	Y	Y
Firm	Y	Y
Year × Industry	Y	Y
Observations	8369	8369
Adjusted R2	0.672	0.138

Note: ***, ** and * indicate significance at the levels of 1%, 5% and 10%, respectively; the standard errors in parentheses are clustered at the provincial level.

Table 6

Robustness check: replace key variables.

Variable	Corporate Green Technology Innovation
	(1)	(2)	(3)	(4)	(5)	(6)
FD2	0.466	0.473
	(0.388)	(0.353)
Effort		0.004		−0.037		−0.028
		(0.111)		(0.144)		(0.122)
Effort × FD2		1.493
		(1.363)
FD2t-2			0.621 *	0.631 *
			(0.338)	(0.331)
Effort×FDt-2				0.011
				(1.773)
FD3					0.777 *	0.902 *
					(0.455)	(0.490)
Effort × FD3						1.856 ***
						(0.548)
Controls	Y	Y	Y	Y	Y	Y
Year	Y	Y	Y	Y	Y	Y
Firm	Y	Y	Y	Y	Y	Y
Year × Industry	Y	Y	Y	Y	Y	Y
Observations	10,688	10,688	8369	8369	10,688	10,688
Adjusted R2	0.175	0.175	0.148	0.148	0.175	0.176

Note: ***, ** and * indicate significance at the levels of 1%, 5% and 10%, respectively; the standard errors in parentheses are clustered at the provincial level.

Table 7

Robustness check: changing model settings.

Variable	Corporate Green Technology Innovation
	(1)	(2)
FD	0.257 **	0.257 **
	(0.117)	(0.109)
Effort		0.088
		(0.077)
Effort × FD		0.650 **
		(0.313)
Controls	Y	Y
Year	Y	Y
Firm	Y	Y
Year × Industry	Y	Y
Observations	10,688	10,688
Adjusted R2	0.119	0.119

Note: ***, ** and * indicate significance at the levels of 1%, 5% and 10%, respectively; the standard errors in parentheses are clustered at the provincial level.

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