Environmental regulation, governance transformation and the green development of Chinese iron and steel enterprises

Abstract The green development of Chinese iron and steel industry with high pollution and energy consumption has become an urgent issue. Under the economic transition of China, this paper first establishes a theoretical mechanism for the differential effects of governance transformation models on the green process innovation (GPI) of Chinese iron and steel enterprises (CISEs). Based on the environmental protection data of 86 key CISEs from 2005 to 2018, the global Malmquist-Luenberger (GML) index is used to measure the total factor environmental governance efficiency (TFEGE) which represents the green development. Then the compound effects of environmental regulation (ER) and governance transformation on the TFEGE of 86 key CISEs are empirically studied. The results show that: (1) there is a U-shaped relationship between ER and the TFEGE. (2) Governance transformation and GPI can significantly improve TFEGE, and governance transformation will advance the inflection point of the U-shaped curve and accelerate the realization of the Porter hypothesis (PH), producing a preliminary compound effect. (3) The interaction of governance transformation and GPI has a positive and significant effect on improving TFEGE, but the heterogeneity analysis of regional economic and manufacturing process shows that it only promotes the inflection point of ER and accelerates the realization of the PH in middle- and short-process CISEs, producing a profound lagging compound effect.