Can national sentiment promote green innovation in Chinese firms?

This paper provides a computational measure of national sentiment at the Chinese firm level, representing the intensity of national sentiment in Chinese listed firms by utilizing the proportion of word frequencies of nationalism-related terms. From the perspective of informal institutions, the paper examines the impact of nationalism on corporate green innovation behavior. The findings indicate that nationalism has a positive effect on corporate green innovation, which remains robust after a series of internal validity checks. Further mechanism testing reveals that the rising nationalist sentiment in Chinese enterprises enhances green innovation primarily by improving financial governance performance and increasing government subsidies. The level of legal development strengthens this positive relationship, while the degree of product market competition weakens it. The impact of nationalism on green innovation is more pronounced in state-owned enterprises, those with a longer operating history, and companies with lower overseas sales. This study provides a new explanation for the phenomenon of green innovation in Chinese enterprises and expands the theoretical understanding of the economic consequences of nationalism at the corporate level.