ESG Policy Intensity and Green Innovation: The Moderating Roles of Organizational Slack and Managerial Environmental Awareness

Abstract

While the link between Environmental, Social, and Governance principles and corporate outcomes is widely examined, a significant gap exists in understanding how the intensity of national ESG policies translates into firm-level green innovation, particularly within emerging economies. This study addresses several research gaps by asking: How does national ESG policy intensity affect corporate green innovation, and what key factors moderate this relationship? To answer these research questions, this study employs text-mining methods to construct refined ESG indices for both national ESG policy intensity and firm-level managerial environmental awareness. Analyzing a panel dataset of 2854 Chinese A-share listed firms from 2013 to 2023 using fixed-effects models, our findings reveal that higher ESG policy intensity is positively associated with increased green innovation. Moreover, we find that higher levels of organizational slack and greater managerial environmental awareness positively moderate this relationship. By integrating stakeholder theory with the resource-based view and upper echelons theory, this study provides a more nuanced model of the policy–innovation nexus, highlighting that the effectiveness of macro-level ESG policies is contingent on both a firm’s resource capacity and its leadership’s cognitive orientation.