Cultivating Innovation: The Role of Outdoor Green Space in Corporate Green Innovation

Abstract

Using a unique dataset on land-use in China, we find that the presence of parks and green areas within a 1-km radius of firms’ geographic locations is positively associated with the number of green patents filed and their future citations. Our path analysis shows that firms surrounded by green spaces are more likely to appoint CEOs and directors with environmental expertise and exhibit a greater strategic emphasis on innovation in corporate disclosures, both of which contribute to enhanced green innovation. The relation between green space coverage and green innovation is stronger for firms operating in highly competitive markets, with weaker pioneering innovation capabilities, higher business diversification, greater public environmental attention, and lower corporate social responsibility performance. Together, these findings highlight the positive role of urban green spaces as a micro-geographic factor in corporate sustainability and green innovation, consistent with biophilia theory, which posits that integrating natural elements into working environments is positively associated with emotional well-being and supports higher-order creative outcomes.