Does Financial Slack Influence Green Innovation in Manufacturing Firms?

Different issues with sustainable economic and social growth are currently becoming more visible. Green innovation of manufacturing enterprises is a key strategy for achieving sustainable development, and its motivating forces merit investigation. The green innovation investment of manufacturing enterprises is large and risky. The adequacy of capital is an important consideration for enterprises to choose green innovation. This study focuses on whether enterprises with financial slack are more likely to undertake green innovation projects that require long-term investment and slow to achieve results. This study examines green patent applications as a gauge of green innovation, using 1453 Chinese listed manufacturing firms from 2009 to 2019 as samples. It empirically investigates the effect of company financial slack on green innovation based on the resource-based perspective and examines the diversity of market competitiveness. The empirical findings demonstrate that financial slack significantly enhances green innovation. The findings of additional research indicate that market competition determines the proportional influence of financial slack on corporate green innovation. Financial slack has a greater positive impact on enterprise green innovation in industries with less fierce market competition. The research conclusion clarifies the relationship between financial slack and green innovation, determines its boundary conditions, deepens the situational research on financial slack, and provides a perspective for the dispute whether slack promotes innovation.