Dual‐threshold effect of resources and governance on the role of regulations in green innovation: Novel insights from a four‐regime panel approach

Abstract

Abstract Diverging from existing literature that predominantly examines the individual impacts of environmental regulations, financial resources, and governance focus on green innovation, our study introduces an innovative theoretical framework based on institutional theory, resource‐based view, and attention‐based view to elucidate the collective interplay of these factors in “going green.” Employing a state‐of‐the‐art threshold regression with two threshold variables, our empirical results highlight that only when critical values for both financial resources and governance focus on environmental concerns are simultaneously achieved, does the negative influence of environmental regulations on green innovation transform into a positive effect. Furthermore, less than 10% of observations enter the corresponding threshold interval, with financial resources acting as a peripheral condition in contrast to the central role of governance focus. These findings have significant practical implications for the implementation of environmental regulations and green financial policies, particularly in China and similar emerging economies, where governmental intervention remains pivotal in environmental stewardship.