Environmental regulations and innovation for sustainability? Moderating effect of political connections

Companies are subject to both formal regulation pressure from government and informal regulation pressure from other stakeholders to adopt green innovations for sustainability. Using a sample of 4924 private Chinese companies, our empirical study indicates that both formal and informal regulation pressures have a positive effect on green innovation. We also find that political connections positively moderate the effect of formal regulation pressure on green innovation, but negatively moderate the effect of informal regulation pressure on green innovation.