The eco-innovation mode in China and its impact on carbon emissions: From the exploration/exploitation perspective

Abstract The exploration/exploitation perspective is a well-known concept in the strategic management field; however, it has seldom been used to explore and analyze strategy at a national level. This study utilizes this perspective to analyze China's eco-innovation mode in response to climate change. By categorizing eco-innovation into radical and incremental eco-innovation, we examine the relationship between these concepts using Y02 patents as a proxy and panel data from 30 Chinese provinces from 2004 to 2015. The results show that eco-innovation as a whole as well as both radical and incremental innovations are drivers for reducing carbon emissions. Furthermore, contradictory to most previous empirical results related to the complementarity hypothesis, we find a complementary relationship between radical and incremental eco-innovation. These results collectively represent China's unique eco-innovation mode, confirming the assumed diversity of eco-innovation models in different contexts. The results also show the significant positive effects of economic development, urbanization level, industrial structure, and China's opening up on carbon emissions, indicating that economic and social development have not yet been completely dissociated from carbon emissions in China.