The effects of outward foreign direct investment on green technological innovation: A quasi-natural experiment based on Chinese enterprises

The study employs the initial outward foreign direct investment (OFDI) of 2875 listed firms in Shanghai and Shenzhen A-shares in China from 2006 to 2019 as a quasi-natural experiment to construct a multiplicative difference model, with the objective of investigating the impact of OFDI by Chinese enterprises on the domestic enterprises green technological innovation (GTI) and the underlying mechanisms. The study found that Chinese enterprises' OFDI significantly enhances both the quantity and quality of domestic GTI. The placebo and PSMDID tests confirm the robustness of this conclusion. The heterogeneity analysis suggests that Chinese enterprises' direct investment in countries that have rigorous environmental regulations and high technological levels can promote both the quantity and quality of domestic GTI. Mechanism analysis indicates that enterprises influenced by high environmental compliance pressure can effectively increase both the quantity and quality of GTI through OFDI; however, enterprises under strong environmental media supervision through OFDI can significantly enrich the quantity of GTI but not the quality. Enterprises' OFDI enhances the quality of domestic GTI by increasing research and development funding and the number of research personnel. Furthermore, this study reveals that Chinese enterprises' OFDI significantly promotes the quantity of green process innovation and the quality of green product innovation. However, the effect on the quality of green process innovation and the quantity of green product innovation is not statistically significant. Moreover, particularly in reducing the quality of green process utility innovation, Chinese enterprises' OFDI significantly improves the quality of green product utility innovation. These findings provide valuable insights for China to advance high levels of OFDI and promote sustainable green development.