The Impact of Low-Carbon City Governance on Firm Green Innovation: An Enterprise Life Cycle Perspective

In order to address the climate change crisis, China has actively promoted low-carbon urban development. China has implemented a policy known as the low-carbon city pilot policy (LCCPP). Given the enterprise life cycle theory, a multi-period DID model is employed to investigate the influence of the LCCPP on enterprise’s green technology innovation (GTI). The research reveals that the LCCPP can actually promote enterprise’s GTI. The LCCPP significantly stimulates GTI of enterprises in the growth phase, but not for enterprises in the maturity and recession phases. Path analysis indicates that the LCCPP can enhance enterprise’s GTI by increasing government fiscal subsidies to and research and development (R&D) of firms. Further analysis reveals that although the GTI effects of the LCCPS are not effective for state-owned enterprises (SOEs) and non-manufacturing businesses, it is significant for those enterprises that are in the growth stage. The LCCPP successfully enhances substantial innovation within enterprises, but not for strategic innovation within enterprises. This study enriches the existing scholarly research on the influence of the LCCPP on enterprise’s GTI and holds practical implications for promoting accurate and effective GTI among enterprises, thereby further advancing the transition towards low-carbon urban development.