The Porter hypothesis that focuses on the effect of environmental regulation on the transformation of enterprise innovation is attracting increasingly more and more attention from governments and scholars in China. This paper incorporates geographical location into the analytical framework of Porter hypothesis,and explores the innovation transformation of companies with different geographical location in the background of environmental regulation from the perspectives of financing constraints and market demand. It concludes that stricter environmental regulation helps to enhance the innovation investment level of polluting enterprises and then advance enterprise transformation. Compared with the enterprises that are located in the central cities,the enterprises located in remote regions have lower innovation investment level,and environmental regulation plays a weaker role in activating innovation transformation of enterprises located in remote regions. Further study shows that government fiscal subsidies can relieve financing constraints and insufficient market demand that enterprises located in remote regions suffer,thereby promoting their successful completion of innovation transformation in the context of environmental regulation. It contributes to a more profound understanding of resistance when the enterprises promote transformation and upgrading strategy comprehensively,and provides empirical evidence at the micro level for expansion construction of urban circle and the rationality of the tilt state of financial subsidies to remote areas.
Geographical Location,Environmental Regulation and Enterprise Innovation Transformation
Journal of Finance and Economics Vol. 42, Issue 09, pp. 87 - 98 (2016) DOI:10.16538/j.cnki.jfe.2016.09.008
Cite this article
Zeng Yi, Feng Zhanbin, Zhang Xi. Geographical Location,Environmental Regulation and Enterprise Innovation Transformation[J]. Journal of Finance and Economics, 2016, 42(9): 87–98.
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