Strategic or substantive: The role of green finance in shaping enterprise green innovation

As an essential driver of sustainable development, green finance (GF) is crucial in improving firms' green innovation (GI). However, whether green finance primarily influences strategic or substantive GI remains unclear. Based on institutional theory and principal-agent theory, this study investigates the influence of GF on both strategic and substantive GI performance in China's A-share listed companies from 2010 to 2020. This study also analyzes the moderating role of internal and external corporate governance factors. The results show that GF significantly promotes strategic GI performance, while the relationship between GF and substantive GI performance exhibits an inverted U-shaped pattern. In addition, environmental regulation and managers' environmental concerns negatively moderate the relationship between GF and strategic GI performance, but positively moderate the relationship between GF and substantive GI performance. Further, GI positively affects both enterprises' green and economic performance, although the improvement in economic performance is relatively slow. This study provides policymakers with theoretical foundations and practical guidance in formulating effective environmental policies.