Abstract

Building on the co-evolutionary perspective, this study investigates the reciprocal and co-evolving relationship between political ties and green innovation in the presence of institutional and environmental changes. Using panel data for Chinese listed private firms for a sample period that runs from 2013 through 2016, our findings indicate that political ties have an overall positive impact on green innovation. Moreover, political ties and green innovation mutually reinforce each other in less developed regions or heavily polluted areas; however, green innovation discourages the formation of political ties in regions with high levels of institutional development or less environmental pollution. These findings provide novel insights into the co-evolution of and co-alignment between political strategy, green innovation, institutions, and environments in emerging economies.