How Does Patient Capital Drive Sustainable Innovation? Evidence from Internal Control and Climate Policy Uncertainty for China

Sustainable innovation constitutes the cornerstone of firms’ long-term competitive edge, yet the underlying mechanisms via which patient capital facilitates corporate sustainable innovation remain understudied. Based on a sample of Chinese A-share listed firms spanning 2013 to 2024, this study operationalizes patient capital through two proxies: relational debt and stable institutional ownership. We systematically investigate the impact of patient capital on sustainable innovation, alongside the mediating pathway of internal control quality and the moderating role of climate policy uncertainty. The empirical outcomes indicate that both forms of patient capital exert a significant positive effect on sustainable innovation, with internal control quality serving as a partial mediator in this relationship. Additionally, climate policy uncertainty reinforces the promotional influence of patient capital on sustainable innovation. We further stratify heterogeneity analyses into two dimensions: firm-inherent heterogeneity and external environmental heterogeneity. From the perspective of endogenous firm attributes, the innovation-stimulating effect of patient capital differs markedly across enterprises with distinct ownership types, life-cycle stages, and total asset sizes. Externally, the observed positive impact varies considerably conditional on industrial factor intensity and the regional marketization degree of the firm’s location. These findings expand the existing literature concerning long-term capital and sustainable innovation, and yield actionable implications for corporate management, institutional investors, and policymakers.