Impacts of environmental regulation on innovation in the context of the Internet

Yuanbin Xu; Haiqing Yu; Xin Zeng; Xinmin Zhang

doi:10.1007/s10668-022-02615-w

Impacts of environmental regulation on innovation in the context of the Internet

Environ Dev Sustain. 2022 Aug 26:1-23. doi: 10.1007/s10668-022-02615-w. Online ahead of print.

Authors

Yuanbin Xu¹, Haiqing Yu^{1

2}, Xin Zeng¹, Xinmin Zhang³

Affiliations

¹ Institute of Industrial Economics, Jiangxi University of Finance and Economics, Nanchang, 330013 China.
² Jiangxi Information Center, Nanchang, 330036 China.
³ Institute of Ecological Civilization, Jiangxi University of Finance and Economics, Nanchang, 330013 China.

Abstract

The relationship between environmental regulation and innovation has long been a key issue of scholarly interest. The Porter hypothesis posits that environmental regulations can effectively promote innovation. However, with the rapid development of the Internet, the relationship between environmental regulation and innovation has changed. Through a theoretical analysis, this paper finds that the development of the Internet can not only directly promote innovation but also inhibit innovation through environmental regulations. This paper uses Chinese city-level data from 2014 to 2016 to empirically test the relationship among the Internet, environmental regulation, and innovation. The study finds that (1) the increase in the Internet level and in the intensity of environmental regulations promotes innovation, and the results remain stable after the replacement of the Internet level metrics, (2) the increase in the Internet level inhibits the positive effect of environmental regulations on innovation, but its inhibitory effect is lower than the promotion effect of the Internet on innovation, and (3) the Internet and environmental regulations have a significant promotion effect on the application and acquisition of three types of patents, including invention patents, utility model patents and design patents, with the application and acquisition of utility model patents having the greatest promotion effect, and (4) the analysis of heterogeneity shows that environmental regulation has a greater effect on innovation in eastern and provincial capital cities, and the Internet has a greater effect on innovation in western and nonprovincial capital cities. Finally, this article puts forward policy recommendations based on three aspects: strengthening Internet construction, implementing environmental regulations and policies based on local conditions, and increasing support for R&D and innovation.

Keywords: China; Environmental regulation; Innovation; Internet.

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