Energy saving and emission reduction fiscal policy and corporate green technology innovation

With the increasing prominence of resource and environmental issues, countries around the world are paying more and more attention to the concept of sustainable development. Under this concept, China started to implement a pilot project of "National Comprehensive Demonstration City of Energy Saving and Emission Reduction Fiscal Policy" in 2011 to protect resources and environment through green and low-carbon development. This paper aims to investigate whether and how the pilot policy induces corporate green technology innovation. Based on the data on Chinese listed firms from 2008 to 2019 and the relevant theories of economics, management and organizational psychology, we find that the pilot policy can promote corporate green technology innovation. This indicates that the pilot policy, as an external force, will encourage firms to improve their adaptability through green technology innovation which is one type of organizational change, thus improving their organizational effectiveness. The heterogeneity analyses reveal that the promotion effect of the pilot policy on green innovation is stronger among firms in high-carbon industries, firms in the mature stage and firms that are not state-owned. The mechanism tests find that the credit allocation effect and innovation compensation effect generated by the pilot policy are the key channels to promote green technology innovation. In addition to enriching the research on the evaluation of the effects of the pilot policy, our paper also expands the literature on organizational psychology and organizational change from the perspective of corporate green innovation, offers practical implications for the low-carbon transition of manufacturing industries under the emission peak and carbon neutrality targets, and provides insights for other emerging economies to achieve better resource and environmental protection through the energy saving and emission reduction fiscal policy.