Host-Country Institutional Environment, Strategic Adaptation, and Firm Performance: Evidence from Chinese-Invested Enterprises in Indonesia

Leveraging the promulgation of the Green Credit Guidelines as a quasi-exogenous policy shock, this study establishes a rigorous quasi-natural experimental framework to empirically examine the causal nexus between green credit policy and green innovation outcomes in renewable energy enterprises. Employing a Difference-in-Differences (DID) methodology on a comprehensive panel dateset spanning 2016–2025, complemented by systematic heterogeneity analyses, mediation effect examinations, and an extensive battery of robustness tests, we uncover several salient findings. The green credit policy exerts a statistically significant and economically meaningful positive effect on green innovation among renewable energy enterprises. The other is promotional effect manifests pronounced heterogeneity: it is substantially amplified in state-owned enterprises relative to their private counterparts, and in enterprises headquartered in the eastern coastal region compared to those in central and western China. Third, financing constraints operate as a significant mediating channel, partially transmitting the policy effect through the alleviation of capital access limitations. These findings yield important policy implications for optimizing the structural design of green credit instruments and accelerating green innovation transitions in the renewable energy sector.