Page 262 - Ebook HTKH 2024

The evidence from previous results supports the idea that more stringent
environmental regulations will encourage innovation. However, Jaffe, Newell, and
Stavins (2002) discuss that market-based ecological policies (such as pollution taxes)

may provide more substantial incentives for firms to implement cheaper and more
efficient production technologies compared to the command-and-control approaches
(such as environmental compliance regulation). Therefore, in this section, we study
whether big and small firms will have different moderating effects on the association
between ecological government and firm innovation.
To account for the impact of firm size, we introduce the variable Size_dum and
incorporate the interaction term, Public Administration x Size_dum, into Eq. (1) to

investigate how firm size moderates the relationship between Public Administration and
technology transform investment at the firm level. As seen in Table 4, Columns
(1) and (3) show the coefficients of the interaction term Environmental governance x
Size_dum exhibit statistical significance at the 1% level, with a positive value of 10.764
and 0.006. These findings indicate that the impact of environmental concern on
provincial governance appears to be less pronounced for big firms than small firms.

Table 4. Effect of public administration conditional on firm size
Variable TEC1 TEC1 TEC2 TEC2

Size_dum -2.286* -33.171*** -0.004*** -0.016***
(-1.67) (-23.06) (-6.70) (-22.61)
Environmental
governance -15.649*** -15.785*** -0.008*** -0.008***
(-40.23) (-37.61) (-41.52) (-40.00)
Environmental
Governance
#Size_dum 10.914*** 10.764*** 0.005*** 0.006***
(28.01) (26.48) (30.73) (29.88)
LEV -12.632*** -0.005***
(-5.70) (-4.77)
SIZE 11.417*** 0.004***
(208.98) (143.70)
ROA 44.083*** 0.013***
(4.36) (2.61)
ROE 2.735 0.005**
(0.66) (2.34)
CASH 0.127 -0.001

(0.02) (-0.32)
Constant -194.942*** -479.447*** -0.082*** -0.182***
(-140.24) (-318.15) (-128.42) (-244.32)

Observations 1,886 1,886 1,886 1,886

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