Revolutionizing green business: The power of academic directors in accelerating eco-innovation and sustainable transformation in China

Abstract

This study investigates the relationship between academic directors and corporate eco-innovation in Chinese A-listed firms in the context of the growing urgency of climate change. Based on the argument that academic directors bring advanced knowledge, skills, experience, and expertise to a corporate board and are more socially responsible and ethical, we hypothesized that academic directors would have a positive influence on corporate eco-innovation. We also examine how this nexus is moderated by pollutant firms and firms having qualified foreign institutional investors (QFIIs). Our results suggest that academic directors have a positive and significant impact on corporate eco-innovation. The findings remain robust even after employing alternate proxies for both independent and dependent variables, minimizing reverse causality and endogeneity concerns, and addressing self-selection bias through the entropy balancing method. Additionally, our study reveals that the positive nexus between academic directors and eco-innovation is more pronounced in pollutant firms and firms having QFIIs. This study contributes to the literature on corporate governance, eco-innovation, and emerging markets by providing evidence of the positive influence of academic directors on eco-innovation, highlighting the importance of their contribution to enhancing corporate governance mechanisms to promote environmentally friendly activities and sustainability practices. Furthermore, our findings offer insight into the role of QFIIs in strengthening the positive association between academic directors and eco-innovation, suggesting that foreign investors can support and encourage firms to adopt environmentally friendly practices for long-term benefits.