Policy, Innovation, and Total Factor Productivity of the Chinese Wind Power Industry: Does Dynamic Capability Matter?

Abstract

Due to the environmental and economic advantages, wind power has been highly valued by the Chinese government in the energy transformation process. The Chinese government has promulgated a series of wind power policies, but their impacts on innovation and subsequent total factor productivity (TFP) are still not clear. Meanwhile, the role of dynamic capability seems to have been ignored. This study systematically evaluates the impact of policy on the innovation and subsequent TFP of the Chinese wind power industry. Then, we distinguish between integration capability and reconfiguration capability and elucidate their moderating effects on the relationship between policy and innovation. The empirical results indicate that policy and TFP of the Chinese wind power industry are positively correlated. Innovation plays a partial mediating role in the above relationship. Besides, both integration capability and reconfiguration capability significantly enhance the positive impact of policy on innovation.