Environmental regulation, green innovation, and export product quality: What is the role of greenwashing?

To facilitate sustainable growth, green innovation, and industrial upgrading, it is important to explore the relationship between environmental regulations and firm performance. Green innovation is increasingly being recognized as an important determinant of the quality of export products, which plays a critical role in international business and finance. Therefore, this paper empirically examines the impact of green innovation on export product quality at the firm level using relevant data from Chinese exporters. First, we identify a positive relationship between green innovation and export product quality. Second, environmental regulations are observed to have a negative effect on green innovation for highly-polluting firms but do not significantly impact those with lower levels of pollution. Third, our research reveals that the negative effects only exist in those highly-polluting firms that exhibit greenwashing behavior, with financial constraints strengthening these impacts. Therefore, this study reveals that the greenwashing suppression effect curbs the efficiency of environmental regulations on green innovation.