Climate Risk and Manufacturing Green Innovation: Evidence from Extreme Heat Exposure

Climate risk is increasingly reshaping firms’ operating environments, yet limited evidence exists on how climate-related pressures influence corporate green innovation and through which organizational mechanisms such effects occur. Drawing on induced technological change theory and dynamic capability theory, this study investigates how climate risk, reflected in firms’ exposure to extreme high-temperature days, affects green innovation among Chinese A-share listed manufacturing firms during 2010–2022. The results indicate that climate-related heat shocks significantly promote firms’ green innovation. Mechanism analyses show that this effect operates through two channels: increased R&D investment and enhanced adaptive capacity. Further analyses reveal that the innovation-promoting effect of climate-related pressures is strengthened by regional green finance development but weakened by firms’ financial slack. In addition, the positive effect is concentrated among non-state-owned enterprises and non-heavily polluting firms. This study contributes to the literature by extending induced technological change theory to the firm level and highlighting how climate-related pressures influence green innovation through both resource reallocation and organizational adaptation. The findings also provide new evidence on the roles of external financial support and internal resource conditions in shaping firms’ innovation responses to environmental change.