Environmental Regulation and Enterprise Innovation

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Received: 27 February 2019 Revised: 18 November 2019 Accepted: 2 December 2019
DOI: 10.1002/bse.2446
RESEARCH ARTICLE
Environmental Regulation and Enterprise Innovation: A Review
Shuai Shao1 | Zhigao Hu1 | Jianhua Cao1 | Lili Yang2 | Dabo Guan3
1
School of Urban and Regional Science,
Shanghai University of Finance and Abstract
Economics, Shanghai, 200433, China The impact of environmental regulation on enterprise innovation is closely related to
2
School of International Economics and Trade,
the competitiveness of the enterprise and sustainable development of the regional
Shanghai Lixin University of Accounting and
Finance, Shanghai, 201209, China economy, but existing research does not provide a consistent view. This paper sum-
3
Department of Earth System Science, marizes the impacts of environmental regulation on enterprise innovation from the
Tsinghua University, Beijing, 100083, China
perspectives of technological innovation, product innovation, system innovation and
Correspondence ecological innovation. We find that the impacts of environmental regulation on enter-
Zhigao Hu, School of Urban and Regional
Science, Shanghai University of Finance and prise innovation behaviour are complex, and that the impacts can be reflected
Economics. Shanghai, 200433, China. together by the four aspects above and even by their interaction. Moreover, the
Email: [email protected]
impacts are not limited to the creation of new technologies, products, and systems
Lili Yang, School of International Economics but also include their adoption and application. In particular, whether the Porter
and Trade, Shanghai Lixin University of
Accounting and Finance, Shanghai 201209, hypothesis is true and which versions of the Porter hypothesis environmental regula-
China. tion causes in enterprise innovation depend on enterprise characteristics, means of
Email: [email protected]
environmental regulation, and enterprises' strategic behaviours in an enterprise eco-
Funding information system. Finally, we propose five potential research directions: quantifying the degree
National Natural Science Foundation of China,
Grant/Award Numbers: 71922015, 71773075, of enterprise innovation caused by environmental regulation, the impacts of environ-
71503168, 41921005, 91846301 and, mental regulation on sustainable economic development from an enterprise ecosys-
41629501; Major Project of National Social
Science Foundation of China, Grant/Award tem perspective, the impacts of enterprise innovation on environmental regulation,
Number: 18ZDA051; National Top-Notch the role of enterprise initiative in the relationship between environmental regulation
Young Talent Support Program of China; UK
Natural Environment Research Council, Grant/ and enterprise innovation, and social security issues and the integration of eliminated
Award Numbers: NE/N00714X/1 and, NE/ enterprises resulting from environmental regulation.
P019900/1; Royal Academy of Engineering,
Grant/Award Number: UK-CIAPP/425; British
KEYWORDS
Academy, Grant/Award Numbers:
NAFR2180103 and, NAFR2180104; ecological innovation, environmental regulation, product innovation, system innovation,
Innovation Fund of Shanghai University of technological innovation
Finance and Economics for Postgraduate,
Grant/Award Number: CXJJ-2017-452
1 | I N T RO DU CT I O N focuses on the relationship between the economy and society. There-

fore, environmental regulation is the closest combination of environ-
With the deepening influence of the natural environment on the mental economics and macroeconomics and an inevitable issue in the
macroeconomy, environmental economics has gradually created process of achieving sustainable development. The impact of environ-
opportunities for the forefront of economic research. In 2018, mental regulation on enterprise innovation is not only in line with the
Nordhaus won the Nobel Prize in economics, indicating that environ- theoretical framework of Romer's endogenous economic growth
mental economics had officially become a mainstream direction of model but also a real issue for government and enterprises. Therefore,
economic research. Further integration of environmental economics the impact of environmental regulation on enterprise innovation
and macroeconomics will also become an important trend in the behaviour is a top priority in current economic research.
future development of economic research. Environmental regulation The positive effects of environmental regulation on the
is a subject of environmental economics, while macroeconomics macroeconomy are mainly manifested through the innovative
Bus Strat Env. 2020;29:1465–1478. wileyonlinelibrary.com/journal/bse © 2020 John Wiley & Sons, Ltd and ERP Environment 1465
10990836, 2020, 3, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.2446 by Universidad Nacional Autonoma De Mexico, Wiley Online Library on [31/01/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1466 SHAO ET AL.
behaviour of enterprises. If a country adopts a more stringent envi- perspective. Therefore, this paper systematically reviews the relation-
ronmental regulation policy than its competitors, then the increase in ship between environmental regulation and enterprise innovation
innovation will render the country a net exporter of newly developed behaviour from the perspectives of technological innovation, product
environmental technologies, which will have an impact on economic innovation, system innovation and ecological innovation.
performance (Porter, 1991). On the one hand, as the degree of eco-
nomic openness increases, the difficulty of technology acquisition
decreases, and the difficulty of transmitting regulatory costs to con- 2 | EN V I R O N M E N T A L R E G U LA T I O N A N D
sumers increases, which causes an increased demand for enterprises TECHNOLOGICAL INNOVATION
to innovate in the face of the stronger environmental regulation
(Lovely & Popp, 2011). On the other hand, under the requirements of Technological innovation refers to the process of improving and
sustainable development, the intensity of environmental regulation upgrading existing technologies (Dosi, 1982; Nelson & Winter, 1982).
will continue to increase. Restricting the use of pollution technologies According to existing studies on pollution and development, scale
or forcing the use of cleaner technologies results in high implicit emis- effects (more production, more pollution), composition effects (mixed
sion costs for enterprises and thus stimulates enterprises to innovate changes in economic activities can improve or exacerbate emissions),
(Perman, Ma, Maddison, & McGilvray, 2011). Therefore, the impact of and technological effects (using cleaner technologies) occur most fre-
environmental regulation on enterprise manufacture will become quently (Lovely & Popp, 2011), and the technological effect is related
increasingly difficult to avoid, and the impact of environmental regula- to sustainable development of a country and enterprises, and there-
tion on innovation will play an increasingly important role in macro- fore receives the most attention in recent research. The ideological
economic development. origin of the technological effect can be traced back to Hicks (1932).
However, from a realistic or a theoretical perspective, many He believed that changes in the relative prices of products could stim-
issues associated with environmental regulation and enterprise inno- ulate firms to invest more intensively in innovation. Habakkuk (1962)
vation are difficult to be explained. In reality, governmental environ- approved this view and found that labour shortages led to wage
mental regulation is an important way to compel enterprises to take increases and the invention and adoption of labour-saving technolo-
environmental protection actions (Henriques & Sadorsky, 1999; gies. Subsequent studies have similarly shown that price rather than
Rugman & Verbeke, 1998). However, in the second decade of the explicit instructions can generate strong incentives for enterprise
21st century, as the top two greenhouse gas emitters, China and the innovation (Gilbert & Cvsa, 2003; Jung, Krutilla, & Boyd, 1996; Popp,
United States still do not achieve a satisfied outcome in reducing car- 2002). Environmental regulations that limit the production of some
bon emissions (Welfens, Perret, Irawan, & Yushkova, 2016).1 If envi- high-pollution and high-emission industrial raw materials are clearly
ronmental regulation is so important for enterprise innovation, how consistent with this scenario.
can this paradox emerge? In theory, many unresolved problems con- However, in most cases, environmental regulation is designed not
cerning the impact of environmental regulation on enterprise innova- to limit production processes but to limit production results. Thus,
tion remain. For example, what kind of innovation behaviour does Hicks' (1932) view is not sufficient to explain the impact of environ-
environmental regulation encourage enterprises to undertake? How mental regulation on enterprise innovation. The environmental prob-
does environmental regulation lead enterprises to innovation? Most lem was only a minor issue for social development and did not arouse
scholars explore these issues from their respective perspectives with- much attention until the end of the 20th century, when Porter and
out a theoretical or logical analytical framework. van der Linde (1995) proposed the famous Porter hypothesis. Porter
Some scholars (e.g., Bergek & Berggren, 2014; Brío & Junquera, and van der Linde (1995) believed that when organizations try to
2003; Iraldo, Testa, Melis, & Frey, 2011) try to determine the relation- improve the environmental efficiency of resource utilization, innova-
ship between the environment and the development of the green tion may occur, which helps improve production processes and prod-
economy, but either the literature is outdated or the issues discussed uct quality and enhance the respect for the environment. This
are not sufficiently narrow, and no scholars specifically review and outcome leads to other competitive advantages in the long run, thus
summarize the existing related studies from the perspective of envi- strengthening the innovation performance of enterprises.
ronmental regulation and enterprise innovation behaviour. Although However, this is just a narrow version of the Porter hypothesis
studies on the impact of environmental regulation on enterprise inno- which emphasizes that certain types of environmental regulations lead
vation have been quite rich, views are mixed and lack a coordinated to innovation by controlling outcomes rather than processes. Requate
and Unold (2001) effectively interpreted this version of the Porter
1
hypothesis, considering that only an environmental tax can lead to a
First, the means of regulating corporate environmental behaviour through administrative
power include technical standards, environmental taxes, and setting quotas (e.g., emission large investment in new technologies, and that the impact of auctions
trading system, ETS). Second, according to the view of Welfens et al. (2016), the most and free licenses on enterprise innovation investment is relatively
effective strategy to reduce emissions is through ETS. The ETS in America has two main
forms (the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative
weak. However, the narrow version of the Porter hypothesis does not
(WCI)), but the coverage is not high. The RGGI is used only by the power sector in ten states explain the innovations generated by the regulation of production
in the northeastern United States, and the WCI is implemented only in California. In China,
processes and not consider differences between enterprises; thus,
the carbon emission trading system was launched nationwide at the end of 2017 and only
covered the power sector at present. the hypothesis is not always confirmed. Some studies, such as
SHAO ET AL. 1467
Brunnermeier and Cohen (2003) and Jaffe, Newell, and Stavins maximization paradigm, and the impact of new environmental
(2004), show that technical standards and non-tradable emission regulations may prompt enterprises to broaden their thinking and find
allowances do not motivate innovations because innovations that new products or processes that are in line with regulations and can
exceed facility and quota obligations are not beneficial; once a com- increase profits. In this case, environmental regulation provides an
pany has adapted to technologies that it needs, no incentive to opportunity for enterprise innovation and thus does not necessarily
improve beyond the standard exists (Johnstone, Haščič, & Popp, cause some compliance costs to enterprises. Therefore, the strong
2010). Through an examination of China's clean production standards, version of the Porter hypothesis suggests that environmental
Yuan and Xiang (2018) found that environmental regulation signifi- regulation can not only promote enterprise innovation but also
cantly increased the profitability of enterprises but did not promote improve enterprise performance. Table 1 lists some typical studies on
enterprise innovation. Shi, Qiu, Feng, and Ekeland (2018) estimated the Porter hypothesis.
the impact of China's carbon emissions and trading pilot policy on The results of many studies still cannot be explained by any of
enterprise innovation. The authors conclude that this policy signifi- the three versions of the Porter hypothesis. For example, Newell,
cantly inhibits the innovation of both regulated and non-regulated Jaffe, and Stavins (1999) introduced environmental regulation into the
enterprises to reduce enterprise productivity. product feature model and found that the impact of environmental
In this regard, the original Porter hypothesis has gradually evolved regulation on innovation is applicable to some products rather than all
into a weak version indicating that, for new enterprises, strict environ- products, while the speed of innovation is not related to environmen-
mental regulation can stimulate enterprise innovation by imposing tal regulation. Brunnermeier and Cohen (2003) studied how environ-
constraints on profit opportunities and changing profit maximization mental innovations in US manufacturing responded to changes in
2
conditions (Jaffe & Palmer, 1997). Although the weak version of the pollution-reduction expenditures and the enforcement of environ-
Porter hypothesis does not limit the category of environmental regu- mental regulation during the period of 1983–1992 and found no addi-
lation, it can only show that environmental regulation can stimulate tional innovation incentive caused by existing regulations and law-
certain innovations in certain enterprises. Moreover, since adding con- enforcement activities. Carrión and Innes (2010) estimated the syn-
straints to the maximization problem does not improve the results, chronous panel data model for environmental innovation and toxic air
the weak version indicates that the additional benefits of enterprise pollution and found that innovations in environmental regulation con-
innovation will not exceed the opportunity cost imposed by environ- tribute little to long-term emission reduction. Leeuwen and Mohnen
mental regulation without considering social value. As Lanoie, (2013) and Zhao and Sun (2016) showed that environmental regula-
Laurent-Lucchetti, Johnstone, and Ambec (2011) observed, although tion can even inhibit the efficiency of technological innovation and
rigorous environmental regulation can promote enterprise innovation, reduce the productivity of manufacturing. Therefore, from some per-
the benefits from the innovation can only partially offset the costs of spectives and sample surveys, environmental regulation has been
complying with environmental policies. Therefore, the net effect of found not to significantly promote enterprise innovation. One reason
environmental regulation on firm performance is negative. Nonethe- for this is that environmental regulation may have little impact on the
less, even under the weak version of the Porter hypothesis, some technological innovation of some enterprises, but it has a significant
exceptions exist. Enterprises that have previously invested in pollut- impact on technology adoption and diffusion.
ant emission-reduction technologies or with a comparative advantage In addition, Gray and Shadbegian (1998) showed that green pro-
in environmental compliance are not affected by environmental regu- duction regulation enables enterprises to achieve cleaner production
lation. Therefore, increasing environmental regulation intensity does standards by purchasing new pollution control equipment and produc-
not change the conditions for maximizing enterprise profits, and the tion equipment, rather than by engaging in research and development
net effect of environmental regulation on enterprise performance is (R&D) and innovation. Therefore, for some industries, environmental
therefore zero under the weak version of the Porter hypothesis. regulation may affect technology diffusion more than technological
The weak version of the Porter hypothesis only suggests that innovation. Kerr and Newell (2003) used data from a group of refiner-
environmental regulation can promote enterprise innovation, thereby ies from 1971 to 1995 and found that environmental regulation poli-
enhancing a company's competitive advantage in the long run. cies impacted the environmental performance of enterprises more by
However, the weak version of the Porter hypothesis cannot influencing the adoption of existing clean technologies rather than by
explain enterprises' short-term benefits resulting from environmental encouraging the development of new technologies. Requate and
regulation. Moreover, no evidence shows that innovation output is Unold (2001) argued that when regulators are aware of new technolo-
related to enterprises' costs of compliance with environmental gies, they can induce optimal levels of social adoption before or after
regulations (Jaffe & Palmer, 1997). In other words, once innovation adoption independently of their movement. Perino and Requate
output exceeds the costs of compliance, an enterprise will continue to (2012) also believed that stricter policies have not only increased
obtain profits, reflecting a strong version of the Porter hypothesis. enterprises' enthusiasm for R&D but have also promoted the dissemi-
The strong version of the Porter hypothesis rejects a narrow profit nation of emission reduction technologies. For general technology, an
inverted U-shaped relationship exists between policy rigour and the
2 technology adoption rate. Zhang and Lv (2018) also showed that
Despite the differences between enterprises, some studies do not emphasize that
enterprises must be new to benefit from environmental regulation. green production regulation enables enterprises to achieve cleaner
1468 SHAO ET AL.
TABLE 1 Some typical studies on the Porter hypothesis
Author Object Data Method Narrow Weak Strong

Lanoie et al. (2011) OECDs Facility-level Probit model with instrumental √ √ ×
variable
Murty and Kumar (2003) India Firm-level Output distance function √
Thomas (2004) Austria Case study Conceptual model and case study × × ×
Frohwein and Hansjürgens (2005) European Industry-level Comparative analysis ×
countries
Lanoie, Patry, and Lajeunesse (2008) Canada Industry-level Panel-data model √
Rassier and Earnhart (2010) America Firm-level Panel-data model ×
Rammer and Rexhauser (2014) German Firm-level Sectional-data model √ ×
Rubashkina, Galeotti, and Verdolini European Industry-level Panel-data model √ ×
(2015) countries
Anabel and Jaime (2015) Spain Region-level Dynamic panel-data model √
Yuan and Xiang (2018) China Industry-level Panel-data model × ×
Shi et al. (2018) China Firm-level DID and DDD models × × ×
Bitat (2018) German Firm-level Count data model √
Note: DID and DDD models refer to difference-in-differences model and difference-in-differences-in-differences model, respectively.
production standards by purchasing new pollution control equipment mainly based on empirical methods, and theoretical research on
and production equipment rather than by engaging in R&D and inno- related issues needs to be vigorously promoted. However, theoretical
vation. Although adopting clean technology to cope with environmen- research involves many situations and complicated conditions, and
tal regulations cannot improve the long-term competitive advantages obtaining valuable results is difficult, thus necessitating continuous
of enterprises, it is a necessary measure allowing enterprises with an advancement of basic research.
insufficient R&D capacity to cope with the changes in their environ-
ment. For the macroeconomy, the diffusion of technology enhances
the overall competitiveness of the region; therefore, technology diffu- 3 | EN V I R O N M E N T A L R E G U LA T I O N A N D
sion and innovation are equally important. P RO D U C T I N N O V A T I O N
Existing studies use different versions of the Porter hypothesis to
analyse the impact of environmental regulation on enterprise innova- Strictly speaking, product innovation and technological innovation or
tion under different conditions. At the same time, some literatures process innovation are difficult to separate because product innova-
reveal the role of environmental regulation in promoting the adoption tion includes the application of known technology to new materials
and diffusion of new technologies or clean technologies. In addition, and the improvement of existing products by new technologies,
for this part of research, some consensus viewpoints and controversial knowledge, and processes. Figure 1 shows the relationship between
problems remain, and different studies have different pros and cons. product innovation and technological innovation. As Sanchez and
Existing literatures have reached a consensus that environmental reg- Mckinley (1998) noted, product innovation is largely based on
ulation can generate compliance cost and enterprise innovation will technological innovation. However, Utterback and Abernathy (1975)
produce innovative benefits. The major controversial problems in this inaccurately defined product innovation as a new technology or
field of research are that the impact of environmental regulation on combination of technologies introduced commercially to meet user or
technological innovation has not been consistent under different sam- market needs. Although changes in the production process can induce
ples and research methods, and that none of the different versions of new product innovations (Clark, 1988), technological innovation does
the Porter hypothesis have been certified. The pros and cons of dif- not necessarily lead to product innovation, and product innovation
ferent studies are mainly reflected in the choice of different samples. is not necessarily caused by technological innovation: product
The conclusions obtained from studies using region-level data have an innovation and technological innovation are still different in mode
average significance, but the identification of enterprise innovation is and influence.
weak, and it is difficult to reflect the differences between enterprises. From a formal viewpoint, technological innovation concerns pro-
However, studies using enterprise-level data can accurately identify cess innovation, while product innovation is a result of innovation.
enterprise innovation, and the differences between enterprises can be Considering the impact of innovation, technological innovation can
easily paid attention to, but the spillover effect of innovation in enter- lead to production process standardization, simplification, and high
prises is difficult to capture. Moreover, the sample data of enterprises efficiency. Thus, technological innovation can reduce the production
is easy to generate self-selection problems to cause biased results. cost of an enterprise, increase production efficiency, generate pro-
The major challenge for future research is that existing studies are cess compensation, and ultimately affect the performance of the
SHAO ET AL. 1469
FIGURE 1 Relationship between technological innovation and product innovation
enterprise (Hu, Wang, & Huang, 2017). Product innovation can lead industrial sectors in China from 2001 to 2010 to verify the impact of
to the production of green products with better performance, which environmental regulation on product innovation. The results show
may accelerate the elimination of old products and even change con- that although process innovation and product innovation are both
sumer behaviour and reshape the market (Kaplan, 1999; Van de Ven, intermediate factors between environmental regulation and enterprise
Polley, Garud, & Venkataraman, 1999). Therefore, product innova- performance, environmental regulation plays a stronger role in pro-
tion and technological innovation cannot be generalized in terms of moting enterprise performance through product innovation rather
the mode of innovation and the impact on long-term enterprise than production process innovation. Guo, Xia, and Zhang (2018) even
returns, and the impact of environmental regulation on product inno- believed that strict environmental regulation could promote green
vation must be discussed separately from the impact on technologi- product innovation and inhibit green process innovation in the pres-
cal innovation. ence of governmental support for R&D.
The environmental product innovation can be regarded as a sub- In addition, Becker and Egger (2013) asserted that product inno-
stantial outcome of environmental regulation. Triebswetter and vation is a key factor in creative destruction and Schumpeter's growth
Wackerbauer (2008) argued that environmental regulation was crucial model. A typical case is the impact of environmental regulations on
for introducing green products and reducing market inertia. Compared the chemical manufacturing industry in the United States, reported by
with traditional product innovation, environmental product innovation Ashford et al. (1985). After the environmental regulation of the
helps reduce or avoid environmental burdens. Therefore, environmen- chemical production and use industry in the United States became
tal product innovation can combine business objectives, such as cost strict, significant changes in products and processes were stimulated,
reduction, with environmental benefits. In addition to enhancing which not only enabled innovative enterprises to obtain great
enterprise competitiveness (Danneels, 2002), product innovation can competitive advantages but also facilitated the development and
improve resource utilization efficiency, increase the return on invest- social progress of the whole industry. Triebswetter and Wackerbauer
ment and sales, develop new markets, and improve an enterprise's (2008) provided another example of product innovation driven by
image (Dangelico & Pujari, 2010; Miles & Covin, 2000; York, 2009). enhanced environmental regulation: strict national waste oil treatment
Therefore, qualified enterprises have sufficient incentives to carry out regulations stimulated the generation of oil-free compressors for train
product innovation. Ashford, Ayers, and Stone (1985) noted that braking systems. The innovative products have the same performance
when environmental regulation is strengthened, enterprises may inno- but significantly lower weight and energy consumption than the
vate in products in addition to adopting new technologies, optimizing previous products. They are more economical and more efficient and
production processes, and using alternative raw materials. Kammerer have less impact on the environment. The innovative products
(2009) found that environmental regulation could promote the appli- eliminate the need to refuel, replace, recycle, or collect oil and
cation of innovative products. This conjecture is confirmed by Cleff specialize in waste oil and condensate by eliminating all processes
and Rennings (2000), who used data from the 1996 Mannheim Inno- related to oil lubrication. Components, such as filters, oil separators,
vation Group to investigate the determinants of innovative behaviour and condensate collectors, are no longer required. Customers can
in the field of enterprises' environmental protection. They concluded save up to 50% of service costs and 20% of energy costs. The emer-
that, in addition to the strategic market objectives related to the envi- gence of these products has greatly improved the competitiveness of
ronment, environmental regulation (especially the green label) and enterprises and increases their profits. Lee and Kim (2012) also
“soft” regulation (such as ecological audit) also have a greater impact provided a case of product innovation caused by recent environmen-
on product innovation. Dangelico and Pujari (2010) also argued that tal regulations. On the one hand, the ministry of the knowledge econ-
different types of environmental regulation may lead to different omy of South Korea requires the promotion of fluorine-free
levels of green product innovation. refrigerators; on the other hand, it sets limits on the energy consump-
Theoretically, Chan, Yee, Dai, and Lim (2016) analyzed the impact tion efficiency and carbon dioxide emissions of refrigerators, thus
of environmental regulation on enterprise product innovation and leading to the successful development of green refrigerators by
found that this effect is also affected by moderation variables (such as Korean electronics suppliers. The emergence of the green refrigerator
environmental dynamism). Hu et al. (2017) used data from 35 has enhanced the core competitiveness of South Korean electronics
1470 SHAO ET AL.
suppliers and has significantly contributed to South Korean enter- depth studies of product innovation. Moreover, the individual subjects
prises' income increases and export earnings. in case studies are quite different, and the conclusions lack generality
Some studies have also provided clues for how environmental and universality. Future researches need to focus more on the condi-
regulation leads to enterprise product innovation. Jones and Butler tions under which environmental regulation leads to different enter-
(1988) argued that environmental regulation was conducive to the prises' product innovation. However, accurately measuring the degree
technological innovation of enterprises, and the appearance of new of product innovation should be a top priority for future researchers.
technologies could help enterprises broaden the scope of their prod-
ucts and provide the basic conditions for product innovation.
Rosenkranz (2003) believed that when an enterprise has sufficient 4 | EN V I R O N M E N T A L R E G U LA T I O N A N D
capacity to invest in technological innovation and product innovation, SYSTEM INNOVATION
it will be more inclined to invest in product innovation to meet con-
sumer demands, which represent an external incentive for product Existing studies argued that environmental innovation refers not only
innovation. When an enterprise product has an eco-label, consumers to the innovation of environmental technology but also to the innova-
will be more inclined to choose such a product; thereby environmental tion of environmental sense, organizational management modes, and
regulation will also promote the product innovation of the enterprise marketing service modes (e.g., Li, 2012). However, few studies have
by acting on consumer preferences. focused on the impact of environmental regulation on enterprises'
In addition, Triebswetter and Wackerbauer (2008) suggested that system innovation. System innovation refers to the transformation of
both the age and customization orientation of enterprises could existing systems to enable innovators to gain additional benefits
strengthen the trend of enterprises to respond to environmental regu- (Davis & North, 1970). Many studies have regarded the enterprise
lation by developing new products. Although the authors do not accu- system as a given exogenous factor and have discussed the impact of
rately explain why the age of an enterprise affects product environmental regulation on enterprise environmental performance
innovation, they confirm that a stronger product customization guid- and innovation ability under the framework of this exogenous factor.
ance corresponds to a stronger product innovation ability. Enterprises For instance, both Horbach (2006) and Triebswetter and
with stronger product customization orientation are more capable of Wackerbauer (2008) believed that environment-oriented political
producing products according to customers' personalized needs, and opportunities, organization of information flow, and innovation net-
they can repeatedly modify the production process and final products works are all manifestations of enterprises' system structures and
in the process of personalized customization. Therefore, when exter- important factors affecting enterprise competitiveness. Murillo-Luna,
nal shocks, such as environmental regulation, make new requirements Garcés-Ayerbe, and Rivera-Torres (2011) argued that enterprises with
on these enterprises, they can still flexibly change their production a low degree of employee participation in decision-making and a lack
processes, launch a new product design to match their new processes, of technical information and communication capability failed to imple-
and finally design new products on the premise of meeting environment proactive or advanced environmental strategies. This indicates
mental standards. Fadhilah and Andriyansah (2017) studied the prod- that the internal system of an enterprise largely determines the impact
uct innovation behaviours of 464 entrepreneurs in small- and of environmental regulation on enterprise performance. Baron and
medium-sized enterprises and found that a stronger market orienta- Tang (2011) found that institutional factors, such as organizational
tion and a deeper value creation concept correspond to a greater ori- design, can affect innovations at different levels of an enterprise by
entation of small- and medium-sized enterprises towards market influencing the quantity and quality of information exchange, the level
demand and integration into the innovation network and a stronger of decision-making, and how organizational members monitor the
ability for green product innovation, indicating that the improvement external environment.
of environmental standards can motivate this type of enterprises to Meanwhile, Fichter and Clausen (2012) believed that the system
innovate products. innovation of an enterprise, including marketing mode, the transparency
The existing literatures have reached a consensus that once envi- of innovation, and institutional compatibility, plays an important role in
ronmental regulation has contributed to an enterprise's product inno- influencing the diffusion of environmental technology and the market
vation, the impact of such innovation on enterprise efficiency and power and political promotion of mature suppliers. Amores-Salvadó,
competitiveness will be enormous. The pros and cons in different Castro, and Navas-López (2015) also showed that an environmental
studies are mainly reflected in the choice of different methods. Empir- regulation system could positively affect the relationship between the
ical research is more ideal for revealing causality, and a small number environmental product innovation and market performance of a com-
of empirical studies discuss the impact of environmental regulation on pany. Both Kanda, Tomohiko, and Hjelm (2016) and Klemetsen, Bye,
product innovation. However, such researches have a large problem and Raknerud (2016) argued that a poor enterprise system could lead to
related to the measurement of product innovation levels and cannot a short-term profit-oriented business mode to hinder the innovation
distinguish product innovation from technological innovation. While and dissemination of environmental technologies, and that a good
case studies can accurately identify product innovation rather than enterprise system could foster a long-term strategy for the business,
technological innovation, they cannot clearly reveal the conditions thereby promoting technological innovation and product innovation.
triggered by product innovation, which is not conducive to more in- Although the above literatures focus on the impact of institutional
SHAO ET AL. 1471
factors on enterprises' environmental innovation and environmental concerning the impact of environmental regulation on innovation may
performance, these studies do not consider the impact of environmental be biased. This view reveals that environmental regulation can affect
regulation on the enterprise system itself. technological innovation directly as well as indirectly through its
Some studies (e.g., Claudia & Francesco, 2013) argued that, in impact on enterprises' system innovation.
response to the pressure imposed by strict environmental regulations Some studies have also explained the reasons why environmental
on enterprise costs, enterprises will engage in innovative activities, regulation affects enterprises' system innovation. The mechanism of
including both technological innovation and system innovation, in environmental regulation promoting an enterprise's system innovation
order to reduce costs. O'Rourke (2004) found that some environmen- is summarized in Figure 2. Audretsch, Grilo, and Thurik (2007)
tal regulations require enterprises to conduct self-assessment and argued that entrepreneurs recognize the economic importance of
process improvement, which are critical to successfully motivating environmental performance and may invest resources in green
enterprises to innovate for the environment. Tarui and Polasky (2005) technology R&D. When enterprises benefit from this investment,
noted that because environmental regulation is a means of responding traditional measures to address competition, such as property rights
to pollution at the time, environmental regulation may change as the protection and product and factor market supervision, will strengthen
environmental quality changes or as consumers' environmental the shaping of enterprise culture and promote changes in organiza-
requirements change. However, forward-looking enterprises will con- tional management.
sider this relationship when responding to governmental environmen- Therefore, environmental regulation can help enterprises shape
tal regulation goals so that the environmental strategy of an enterprise culture and promote system innovation. Both Khanna
enterprise comprehensively considers future expectations. From this and Anton (2002) and Frondel, Horbach, and Rennings (2008)
perspective, enterprises with no long-term vision are always passive argued that if differences in innovation incentives and innovation
in responding to changes in environmental regulations, and the cost inputs exist between firms in different institutional environments,
of compliance that they face may be enormous in the long run. There- then environmental regulation policies can enhance the opportunities
fore, environmental regulation can be a trial and spur for the upper for enterprises to voluntarily adopt better environmental innovation
management and even the system design of enterprises. systems by focusing on internal factors that stimulate businesses.
In contrast, the system innovation mentioned in Kemp and González (2010) found that these internal factors stem from the
Arundel's (1998) definition of environmental innovation more compre- financial status of an enterprise, the ability to absorb technologies,
hensively corresponds to the impact of environmental regulation and skilled human resources, and the commitment of senior management.
is more consistent with the innovation behaviours of enterprises. Murillo-Luna et al. (2011) believed that budget and organizational
Kemp and Arundel (1998) argued that environmental innovation constraints, aversion to innovation and technological change, limited
includes new or improved processes, technologies, systems, and prod- incentives, and operational inertia are more important internal factors
ucts that can avoid or reduce environmental damage. This definition that influence innovation in enterprise systems. Baron and Tang
proposes system innovation in addition to process innovation, techno- (2011) argued that environmental regulation could influence the
logical innovation, and product innovation. Kemp (2007) noted that system innovation of enterprises through organizational factors,
environmental policy must be oriented to system innovation involving such as centralized processing of analytical capabilities, enterprise
structural changes, implying that, on the one hand, enterprise's system scale, and R&D capabilities. Moreover, González (2010) believed that
innovation responds to changes in environmental regulation, and on environmental regulation may also significantly promote system
the other hand, different types of environmental regulations have dif- innovation through some external factors. For example, the pressure
ferent effects on different levels of innovation. Baron and Tang of supervision through networks and competitors can reduce the
(2011) noted that when the impact of environmental regulation on possibility of abnormal profits, elicit a sense of survival crisis, and
the organization and design of enterprises is neglected, the results
F I G U R E 2 Mechanism of
environmental regulation affecting
enterprises' system innovation
1472 SHAO ET AL.
motivate enterprise management innovation and system innovation The concept of the enterprise ecosystem was first proposed by
under strict environmental regulations. Moore (1998) who mentioned that enterprise ecosystem is a
Existing studies indicate that enterprises' system innovation is not mutually-supported extended system consisting of consumers, sup-
only the result of environmental regulation acting on enterprise innova- pliers, major producers, financial institutions, governments, and other
tion behaviour but also a medium allowing environmental regulation to stakeholders (see Figure 3). Under the ideological framework of enter-
influence enterprise innovation at other levels. However, existing stud- prise ecology, some scholars have investigated the innovation behav-
ies considering the enterprise system as an exogenous factor in environ- iours of enterprises. For example, Dushnitsky (2010) argued that truly
mental regulation and enterprise innovation are abundant, while direct brilliant entrepreneurs should cultivate development strategies that
researches on the impact of environmental regulation on enterprises' should be consistent with their enterprise ecological environment.
system innovation mainly remain at the level of qualitative analysis, and Majava, Leviäkangas, Kinnunen, and Kess (2016) believed that an
empirical analysis is still scarce. In addition, existing literatures reveal enterprise should regard itself not as a single enterprise but as a mem-
that the understanding of how environmental regulation affects enter- ber of a business ecosystem and consider its life courses and the
prises' system innovation is not sufficiently comprehensive, and the interactive relationship between different enterprises in an open eco-
arguments proposed are also insufficient. From the perspective of system from an ecological perspective. Furthermore, Prendergast and
methodology, the system innovation of enterprises is difficult to be Berthon (2000) asserted that when developing a competitive strategy,
examined from the perspective of quantitative analysis. Therefore, the enterprises should not only proceed from their own position but also
direction and challenge of future research is to introduce environmental consider the healthy development of partners and the entire business
factors within the framework of institutional economic analysis. network. Due to the above characteristics of the enterprise ecosys-
tem, enterprises within the enterprise ecosystem can form a commu-
nity subject to both profit and loss. The “frontline” enterprises bear
5 | E N V I R O N M E N T A L R EG U L A T I O N A N D the brunt of an increase in the intensity of environmental regulation
E CO LO GI C A L I N N OV A TI ON to cause linkage effects among other enterprises in the ecosystem.
In particular, Claudia and Francesco (2013) suggested that enter-
Some scholars have argued that the impact of environmental regulation prises that are not directly affected by environmental regulation may
on enterprise innovation may not be straightforward (Chakraborty & also choose or be induced to invest in technology development that
Chatterjee, 2017; Claudia & Francesco, 2013), and that the network of can improve environmental performance for two reasons. On the one
relationships between enterprises also has an important impact on hand, any enterprise has certain social responsibilities and environ-
enterprise innovation (a similar example is the innovation ecosystem) mental responsibilities, and innovation in environmental technologies
(Huang & Wang, 2017). In enterprises with vertical linkages, down- can manifest its social responsibility; on the other hand, the gradual
stream enterprises are led by environmental regulation to generate enhancement of environmental regulation is a trend of social develop-
demand for green technologies, thereby stimulating the development of ment. An enterprise that takes the lead in investing in green products
green technologies in upstream enterprises. Hence, environmental inno- and green technologies can seize opportunities in future competition.
vation may be inherently driven by the induced needs of vertically- This kind of motivation for environmental innovation leads to a deriv-
related enterprises with poor environmental performance. Chu and Lai ative demand of other enterprises in the enterprise ecosystem to trig-
(2014) described this process more straightforwardly: emission- ger greener technological innovation in vertically-related industries.
reduction technologies are developed in the upstream industries and More surprisingly, Lanjouw and Mody's (1996) findings show that
then are sold to downstream polluting industries. in the innovation caused by environmental regulation, the main source
From the perspective of horizontal relationships, Cui and Wei of innovation or the main body of innovation is the equipment sup-
(2012) believed that the enterprise cluster network is an enterprise plier rather than the technology user. After quantitative evaluation,
innovation ecosystem. The competition and cooperation of various the authors found that the ratio of innovation in external industries to
innovation entities can effectively promote knowledge spillover innovation in the internal industry was approximately 80/20. Heyes
between enterprises, thereby increasing the innovation supply capac- and Kapur (2011) even believed that the R&D efforts of polluting
ity of enterprises. Nicotra, Romano, and Giudice (2014) also argued industries may be redundant from the perspective of the social divi-
that the cluster network relationship between enterprises could affect sion of labour. Because polluting enterprises are often one part of the
knowledge absorption, knowledge learning, and knowledge transfer enterprise ecology, most enterprises, as users of clean technologies,
to significantly promote the collaborative innovation of enterprises. do not have the ability to invest capital in clean technology R&D for a
Therefore, from the perspective of enterprise ecology, in addition to long time, but other enterprises in the enterprise ecosystem may have
the upstream and downstream entities of the value chain, other enti- corresponding R&D foundations and conditions more suitable for
ties within the enterprise ecosystem, including competitors, partners, developing green technologies. Currently, from the perspective of the
and regulatory agencies, may generate innovation incentives (Garnsey whole society, the R&D efforts of polluting industries are likely to
& Leong, 2008). Moreover, environmental regulation is likely to affect become a waste of resources. However, if polluting enterprises span
the innovative behaviours of affiliated enterprises through the enter- the entire industry chain, then the development of clean technologies
prise ecosystem. is a reasonable task for polluting enterprises. In addition, when
SHAO ET AL. 1473
FIGURE 3 Schematic diagram of the business

ecosystem
polluting enterprises have the ambition and ability to master core Therefore, environmental regulation can be considered as an
clean technologies and such intentions can change strategic decisions external impact of the enterprise ecology, which can force enterprises
among enterprises, it is reasonable for polluting enterprises to domi- to cooperate and promote the innovation of enterprise ecology (Zhu
nate the R&D in clean technologies, which may be a useful strategy. & Ruth, 2014). Sarkis (2014) further explained the process by which
Some studies also hold that enterprise ecology is not only an environmental regulation promotes the ecological innovation of enter-
intermediary for transmitting innovation demand and diffusion inno- prises, suggesting that the enterprise ecosystem can not only enable
vation between enterprises under environmental regulation and that the emission-reduction enterprises to cooperate in similar green pro-
environmental regulation can directly affect the optimization and jects and to share green business opportunities but also integrate the
innovation of enterprise ecology (He & Tan, 2017). Costa and Ferr~
ao enterprises' respective resources, technologies, and competitiveness
(2010) believed that the government can promote the formation and through external networks. The strategic level of the enterprise
optimization of the emission-reduction network through environmen- adjusts and optimizes the business model, realizes changes in produc-
tal regulation, and the emission-reduction network is a special form of tion modes, and finally promotes upgrading and innovation through-
the enterprise ecosystem, indicating that environmental regulation out the entire enterprise ecology. In addition, Srinivasan (2017)
can impact the optimization and innovation of the enterprise ecosys- believed that implementing environmental regulation on targeting
tem. Gulati, Lavie, and Singh (2010) argued that the main body of firms can induce their upstream enterprises' innovation, thereby accel-
enterprise ecology has common environmental goals, green values, erating the upgrading of the industrial chain. Dardati and Riutort
and green business goals, and that the upper management of different (2011) noted that environmental regulation is conducive to the flow
enterprises can understand emission-reduction efforts with each of cash in polluting industries to high-productivity enterprises, which
other and easily coordinate environmental strategies with each other. increases the market share of high-productivity enterprises, alleviates
F I G U R E 4 Role of environmental regulation

on enterprise innovation behaviours
1474 SHAO ET AL.
resource mismatch problems, and improves the overall operational have observed that environmental regulation can play a positive role
efficiency of the enterprise ecosystem. in the optimization and innovation of enterprise ecology as an external
Overall, studies focusing on enterprise ecological innovation shock. Therefore, the role of environmental regulation on enterprise
related to environmental innovation started late and regard enterprise innovation behaviours in existing literatures can be shown in Figure 4.
ecology as a medium to transmit innovation demand. In existing litera- Notes: Solid line arrow indicates that existing studies are ade-
tures, the belief that enterprise ecology is affected by environmental quate for the corresponding relationship; dotted line arrow indicates
regulation is implicit. Similar to the studies on system innovation, the that existing studies are insufficient for the corresponding
qualitative analysis cannot provide a realistic basis for the impact of relationship.
environmental regulation on enterprise ecological innovation. Related According to the above literatures, this paper can present the fol-
quantitative studies have not directly focused on the impact of envi- lowing conclusions. First, the impact of environmental regulation on
ronmental regulation on enterprise ecology, and only can provide lim- enterprise innovation behaviour is not singular and can affect the tech-
ited evidence for the verification of the relationship between nological innovation, product innovation, system innovation, and eco-
environmental regulation and enterprise ecological innovation. Thus, logical innovation of enterprises at the same time, and these effects
the lack of empirical analysis is the greatest drawback of existing stud- may have interaction effects. Second, the impact of environmental regu-
ies. Obviously, this requires the research foundation of enterprise lation on enterprise innovation is not limited to the creation of new
ecology to be gradually deepened and the related methodology to technologies, new products, and new systems but also can lead to the
become sufficiently mature. adoption and application of new technologies, new products, and new
systems. Third, whether environmental regulation will lead to innovation
in an enterprise and which enterprises will generate innovation are
6 | CONCLUSIONS AND DISCUSSION related to the characteristics of the enterprise itself and the type of
environmental regulation, as well as the strategic behaviour of other
In summary, existing studies mainly explain the impact of environmen- enterprises in the enterprise ecosystem. Fourth, which versions of the
tal regulation on enterprise innovation from the aspects of technologi- Porter hypothesis environmental regulation causes in enterprise innova-
cal innovation, product innovation, system innovation, and ecological tion (if the Porter hypothesis is true) depend on enterprise characteris-
innovation. Studies on environmental regulation and technological tics, means of environmental regulation, and enterprises' strategic
innovation mainly explore the impact of environmental regulation on behaviours in an enterprise ecosystem. Further research is needed to
enterprise technological innovation under different cases from the explore which innovation outcome of environmental regulation corre-
perspectives of the narrow version, weak version, and strong version sponds to different enterprise characteristics and different types of
of the Porter hypothesis and highlights the difference between tech- environmental regulation. In detail, follow-up studies are suggested to
nology diffusion (or adoption) and technological innovation induced conduct the following potential research directions.
by environmental regulation. Studies on the effect of environmental
regulation on enterprise product innovation highlight the difference 1. The impacts of environmental regulation on the degree of innova-
between the innovations of production processes and products itself. tion. Although studies have examined the impact of changes in the
Among such studies, the influence of the innovation of an enterprise's intensity of environmental regulation on the changing trend of
product on the enterprise or the whole industry is profound and even enterprise environmental innovation, environmental regulation and
subversive. Early studies on enterprises' system innovation from envi- enterprise innovation investigated by existing studies are only gen-
ronmental regulation incorporate the enterprise system only as an eral concepts, and types of both regulation and innovation are not
exogenous variable in the research framework of the impact of envi- specifically defined. Different environmental regulation means
ronmental regulation on enterprise innovation without considering have different influences on enterprise innovation, and enterprise
the process of gradual rationalization of the enterprise system under innovation involves technological innovation, product innovation,
the effect of environmental regulation. system innovation, and enterprise ecosystem upgrading. A general-
Recent literatures have shown that enterprise system is also opti- ized research is meaningless for macroeconomic development and
mized with the strengthening of environmental regulation, but no the survival and competition of enterprises. Different innovations
research has provided sufficient evidence to confirm the impact of have different effects on enterprises and even the whole society.
environmental regulation on enterprises' system innovation, and thus For example, product innovation caused by technological innova-
the main conclusions of existing studies are based on qualitative anal- tion may be subversive to economic and social development.
ysis. Studies on the relationship between environmental regulation Researches that ignores types of specific innovation when dis-
and enterprise's ecological innovation reveals that the enhancement cussing the effect of environmental regulation on innovation may
of environmental regulation leads to the demand of “first-line” enter- draw an absurd conclusion. On the other hand, a lot of studies are
prises for clean technologies and green raw materials, which in turn devoted to investigating whether the impact of environmental reg-
leads to the derivation of clean technologies and green raw materials ulation on enterprise innovation is significant at different levels,
via other enterprises in the enterprise ecosystem and the innovation but few studies focus on how much environmental regulation
of non-direct regulatory enterprises. On the other hand, some studies impacts enterprise innovation. Although Desrochers and Haight
SHAO ET AL. 1475
(2014) argued that environmental regulation is only a relatively 4. The roles of enterprise initiative in environmental regulation and
minor factor for innovation, most efficiency improvements are enterprise innovation. In the final analysis, enterprise innovation
enterprises' autonomous behaviours (Newell et al., 1999). Aghion, resembles a result, while existing studies regard enterprise innova-
Veugelers, and Serre (2009) presented the worrying view that tion as a process, and thus the actual innovation behaviours of
green innovation should not be the dominant direction of innova- enterprises are placed into a black box. If enterprise behaviours in
tion and even lags behind the non-directional innovation. To effec- the black box are always effective, no situation will arise in which
tively solve the increasingly serious environmental problems, such some enterprises can achieve innovation while others cannot. In
a situation needs to be changed. Hence, further related investiga- addition, when the specific innovation behaviours of enterprises
tion on this issue is necessary. In future research, we need to pay are put into the black box, the decision-making of enterprises is
more attention to the impacts of different types of environmental often regarded as a passive process. Based on the research goals, a
regulations on the innovation behaviours of different enterprises. researcher can describe what occurs in the black box in any way
2. The impacts of environmental regulation on high-quality economic he (she) chooses. Therefore, in future research, one should focus
development from the perspective of business ecosystem. Envi- more on proactive actions that enterprises take in the process of
ronmental regulation can affect the green innovation behaviours responding to environmental regulation. Moreover, one should
of enterprises in the enterprise ecosystem through the green consider different types of environmental regulation and coping
demand of downstream enterprises. This may affect the produc- strategies which enterprises adopt to influence innovation and
tion and strategic behaviours and therefore the positioning of indi- open the black box, in order to reveal various ways of enterprises'
vidual enterprises in the enterprise ecosystem, thus leading to the innovation under environmental regulation.
optimization of the internal structure and the overall upgrading of 5. The social security issues and enterprise resource integration that
the ecosystem. From a holistic point of view, environmental regu- can be eliminated by environmental regulation. Another worth-
lation represents an appropriate external pressure that enables while question concerns the trajectory of enterprises that do not
enterprises in the enterprise ecosystem to form close cooperation, innovate under environmental regulation. Environmental regula-
thereby improving the operational efficiency of the ecosystem. tion can intensify competition among enterprises to accelerate the
Therefore, considering the impact of environmental regulation on withdrawal of related enterprises in the market. This may be good
the upgrading of the entire enterprise ecosystem rather than the for a well-established market economy system, but enterprises
impact on a single enterprise is also an important direction of without technological advantage may have a labour advantage or a
future research. Given the urgent need for high-quality economic capital advantage in the long-term market. When these enterprises
development, environmental regulation can promote the rationali- quickly withdraw from the market, widespread unemployment and
zation and upgrading of regional industrial structure through its large debts to financial institutions will appear. In the case that the
effects on the enterprise ecosystem and thus promote the high- social security system is not yet sound and the financial market
quality development of the overall economy. risks are increasing, these situations will challenge the smooth
3. The impacts of enterprise innovation on environmental regula- operation of the macroeconomy. Therefore, how the government
tion. In most existing studies on the impacts of environmental should deal with enterprises that do not innovate in response to
regulation on enterprise innovation, it is assumed that environ- competition, provide social security for labour forces that lose
mental regulation and enterprise innovation do not have an employment in these enterprises, and maintain the stability of the
endogenous relationship. That is to say, environmental regulation affected financial system are worthy of further research.
affects enterprise innovation, but enterprise innovation does not
affect environmental regulation; however, this assumption is not AC KNOW LEDG EME NT
supported in reality. A typical example is given by Smith (1998) We acknowledge the financial support from the National Natural Sci-
and Lyon and Maxwell (2004): DuPont Company's success in the ence Foundation of China (Nos. 71922015, 71773075, 71503168,
Fluorine-reduction technology of refrigerators caused the Mon- 41921005, 91846301, and 41629501), the Major Project of National
treal Protocol to change its standard for chlorofluorocarbon pro- Social Science Foundation of China (No. 18ZDA051), the National
duction from 50% to a complete ban on production by 1999. Top-Notch Young Talent Support Program of China, the UK Natural
Therefore, the endogeneity of environmental regulation and Environment Research Council (Nos. NE/N00714X/1 and NE/
enterprise innovation should be considered in future research, P019900/1), the Royal Academy of Engineering (No. UK-CIAPP/425),
and even the impact of enterprise innovation on environmental British Academy (Nos. NAFR2180103 and NAFR2180104) and the
regulation needs to be examined. In fact, introducing the endog- Innovation Fund of Shanghai University of Finance and Economics for
enous relationship between environmental regulation and enter- Postgraduate (No. CXJJ-2017-452).
prise innovation into Romer's endogenous economic growth
model is not only more consistent with the reality of economic
development but also closer to the research paradigm of main- OR CID
stream economics. This can be an important approach to further Shuai Shao https://orcid.org/0000-0002-9525-6310
integrate environmental economics with macroeconomics. Dabo Guan https://orcid.org/0000-0003-3773-3403
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Environmental Regulation and Enterprise Innovation: A Review

1 | I N T RO DU CT I O N focuses on the relationship between the economy and society. There-

TABLE 1 Some typical studies on the Porter hypothesis

Author Object Data Method Narrow Weak Strong

FIGURE 1 Relationship between technological innovation and product innovation

FIGURE 3 Schematic diagram of the business

F I G U R E 4 Role of environmental regulation

RE FE R ENC E S regional analysis of cross-sectoral differences. Ecological Economics, 96

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