Macroeconomics

Porter hypothesis

Ecology

Environmental regulation

Biology

ISO 14000

Environmental economics

Environmental management system

Technological change

China

Accounting

Economics

Certification

Turnover

Business

Management

Political science

Public economics

Induced innovation

Environmental policy

Industrial organization

Irrigation

Environmental accounting

Economic Modelling

Porter Hypothesis has evoked almost three-decade debate on whether environmental regulation can stimulate firm innovation. However, one missing component in this long stream of literature is the absence of voluntary environmental regulation when defining environmental regulation policy in the first place. We address this gap by examining the impact of the voluntary environmental certification of ISO 14000 on firm innovation. Adopting firm-level survey data, our results show that ISO 14000 certification leads to more innovation input and output in sampled Chinese firms. Therefore, our study sheds light to the debate on Porter Hypothesis and contributes to green innovation literature.

Voluntary environmental regulation and firm innovation in China