Environmental regulations, enterprise productivity, and green technological progress: large-scale data analysis in China

Environmental regulations can increase enterprise production costs and reduce production efficiency. This study analyzes the annual reports of 132 enterprises in 16 highly polluting industries over 9 years, which includes 52,272 data points comprising 1188 observed values from the 132 enterprises. We find that environmental regulations tend to increase the environment-friendly and non-environment-friendly research and development (R&D) inputs of the enterprises. Irrespective of the type of R&D input, the quality of the enterprise staff improves and their enthusiasm and initiative for work increases, resulting in increased enterprise production efficiency. Additionally, an increase in human capital significantly facilitates the improvement of enterprise staff quality, whereas, an expansion in the size of an enterprise does not tend to improve its productivity owing to decreasing returns to scale. This study further conducts a robustness test that replaces the explanatory variables with total factor productivity and resolves Malmquist efficiency indexes. The result of this robustness test supports the preliminary regression results. The conclusion of this study can help enterprises be competitive in global markets, and the results can serve as advice for the leads of enterprises.