Energy Constraint in China at the Expense of Profitability? Perspectives of Green Technology Innovation

Although energy constraints, green technology innovation increment, and corporate profitability are issues of central importance to enterprise management and the environment, many aspects of these elements have been neglected in the present work. Using data from listed manufacturing firms in China, this study presents two major findings. First, the authors identify a u-shaped relationship between city-specific energy constraints and business profitability. Second, they find green technology innovation can significantly drive profitability in different types of industries. In addition, the profitability of certain enterprises, such as those that are smaller and younger can be more drastically affected by energy constraints. To develop a green innovation-driven strategy to allow manufacturing enterprises to achieve greater profitability and promote ecological improvements, they recommend energy policies be more individualized to guide "energy-constraint sensitive" enterprises to success.