Government subsidies and corporate environmental investments: a resource-based perspective

Abstract

PurposeThe purpose of this paper is to analyze the mechanism of the role of government subsidies on corporate environmental investment and explore how specific characteristics of firms affect corporate environmental responsibility.Design/methodology/approachThis paper examines the relationship between government subsidies and corporate environmental investment and models with a sample of 78,854 industries. The authors measure the corporate environmental investment by the natural logarithm of the volume of waste gas treatment facilities.FindingsThe results show the positive effect of government subsidies on corporate environmental investment. In addition, state ownership positively regulates the relationship between government and corporations, but the relationship between them is negatively regulated by the slack resources.Practical implicationsWhen people are increasingly concerned about corporate social and environmental responsibility, clarifying the link between government subsidies and corporate environmental investments can help policymakers formulate policies and allocate limited resources.Originality/valueThis study uses the resource-based view as a theoretical framework to reveal the mechanism of action between government subsidies and corporate environmental responsibility, enriching the previous literature that explores the issue based on the legitimacy perspective.