Does corporate environmental responsibility make firms greener in innovation? The role of knowledge flows

Purpose In the context of severe environmental pollution and resource shortage, this study aims to examine how knowledge flows affect the green activities of firms. Specifically, this paper explored whether the firms’ knowledge flows, namely, knowledge inflow (KIF) and knowledge outflow (KOF), play a moderating role in relationship between corporate environmental responsibility (CER) and green innovation in Chinese high-polluting firms. Design/methodology/approach The analysis was carried out based on a panel data set of 305 heavy-polluting Chinese listed firms from 2010 to 2020. Meanwhile, this paper adopted the fixed model to empirically attest the proposed hypotheses regarding the relationships among CER, knowledge flows and green innovation. Findings The results indicate that there is a U-shaped relationship between CER and green innovation, while the two dimensions of knowledge flows exert opposing effects on the nonlinear link between CER and green innovation. Specifically, KIF positively moderates the effect of CER on green innovation, whereas KOF negatively moderates the effect of CER on green innovation. Originality/value This study demonstrates how green innovation can be influenced by CER and, moreover, provides a more nuanced understanding of the value of knowledge management (KM) in firms’ green activities. In this way, this paper answers the call for understanding the importance of green transformation in the context of KM.