Abstract This study compares innovation in manufacturing with and without environmental regulations. Many studies have either examined technological innovation in a general context without considering regulation or focused solely on innovation under environmental regulation. We examined technology sectors, firm sizes, and their interactions to understand innovation under both regulated and unregulated conditions. Our analysis of 4,000 Korean firms reveals a significant difference in innovation with and without regulation. Sectors with high pollution or green demand were more likely to innovate under environmental regulation, in contrast to the most innovative sectors. Large firms, regardless of sector, were more inclined to innovate under regulations. The results suggest that the relationship between environmental regulation and innovation varies according to a firm's capabilities and the technological attributes of the sector. This understanding informs the design of innovation strategies and appropriate levels of regulation for enhancing the cleanliness of manufacturing technology.
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Daimin Noh (2024) studied this question.
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