Decentralization or Cooperation? The Impact of “Government–Market” Green Governance Synergy on Corporate Green Innovation: Evidence from China

The partnership between government and market plays a crucial role in allocating green resources and fostering collaboration across organizations and departments. It integrates diverse knowledge types into the green innovation process and offers multifaceted insights into enterprises’ responses to green governance decisions. However, existing research predominantly examines the interplay among government green governance instruments, with insufficient exploration of the synergistic impacts of government and market in green governance. This study constructs a capacity coupling coefficient model to measure the synergy degree of “government–market” green governance (GMGG). Exploiting a balanced dynamic panel of 28,451 firm-year observations for 3807 Chinese listed companies from 2010 to 2020, we estimate the causal effect of GMGG synergy on corporate green innovation (CGI) and further dissect the underlying transmission mechanisms as well as the moderating channels through which the effect operates. Empirical results reveal that the effect of GMGG synergy on CGI is subject to diminishing marginal returns, with the effect being significantly more pronounced for substantive green innovation. Heterogeneity analysis indicates that non-state-owned firms, eastern-region firms, and those in non-heavy-polluting industries respond with markedly greater sensitivity. Mechanism analysis further demonstrates that the extent of marketization serves as a mediating channel, whereas an elevated level of digital-economy development mitigates the impact of GMGG synergy on CGI. This study delineates the effective boundary of GMCC synergy in stimulating CGI, providing empirical benchmarks for the synergistic implementation of effective government and efficient market actions in green governance. It further corroborates the positive roles of marketization and the digital economy as novel governance instruments, thereby offering critical policy insights for the coordinated advancement of the “dual-carbon” goals and high-quality economic development.