Bilateral Effects of ESG Responsibility Fulfillment of Industrial Companies on Green Innovation

This paper theoretically analyzes the bilateral mechanism of ESG responsibility fulfillment on green innovation of industrial enterprises and decomposes the promotion effect, inhibition effect and the net effect of mutual influence of ESG responsibility fulfillment on green innovation of Chinese industrial enterprises based on the data of 615 industrial enterprises in China from 2012 to 2021, and it analyzes the regular characteristics of them using bilateral stochastic frontier model. The study shows that (1) ESG responsibility fulfillment can drive green innovation in industrial enterprises. The interaction between the facilitation effect (24.49%) and the inhibiting effect (20.71%) of ESG responsibility fulfillment in industrial enterprises eventually leads to the actual green innovation level being higher than the frontier green innovation level by 3.78%. (2) The driving effect of ESG responsibility on green innovation of industrial enterprises has room for growth; the driving effect of ESG on green innovation gradually increases and turns from negative to positive with the improvement of ESG performance; and the net effect of ESG responsibility on the level of green innovation of industrial enterprises from 2012 to 2020 shows a continuous growth. (3) The driving effect of industrial enterprises’ ESG responsibility fulfillment on green innovation is the highest in the western region, followed by the eastern region, and it is the lowest in the central region. (4) Compared with industrial enterprises in regions with high managerial short-sightedness, non-heavy pollution and low marketization, the driving effect of ESG responsibility fulfillment on green innovation of industrial enterprises in regions with low managerial short-sightedness, heavy pollution and high marketization is stronger.