Change starts within: does managerial ability matter to green innovation?

Abstract

This study delves into the crucial link between managerial ability and green innovation. Motivated by the need for sustainable business practices and the pivotal role innovation plays in environmental sustainability, we identify a significant gap in the existing literature: the specific impact of managerial ability on fostering green innovation has not been adequately explored. Our research is anchored in the resource-based view, arguing that managerial ability is a strategic resource that can significantly influence a firm’s capacity for green innovation. Our empirical analysis employs multiple regression analysis on a dataset of 2455 Chinese A-share listed companies from 2008 to 2022, examining the relationship between managerial ability and green innovation. To ensure a thorough investigation, we control for both firm-specific and year-specific fixed effects. Our findings reveal a significant positive correlation between managerial ability and green innovation, highlighting the critical role of managerial competencies in enhancing environmental innovation. Notably, subgroup analyses indicate that this relationship is more pronounced in state-owned enterprises, firms with a higher proportion of institutional investors, and in contexts with stricter environmental regulations and less developed product markets. These results not only fill the identified gap in the literature by providing empirical evidence of the impact of managerial ability on green innovation but also offer practical insights for businesses, managers, and policymakers looking to promote sustainable innovation.