Strategic deviation and corporate green innovation

This study investigates the impact of strategic deviation on corporate green innovation. Using a sample of Chinese listed companies during 2006-2019, we find that strategic deviation is negatively associated with corporate green innovation. Mechanism tests show that strategic deviation increases agency costs and information asymmetry, intensifies financial constraints, and thus reduces corporate green innovation. Heterogeneity analyses suggest that the characteristics of state-owned enterprises and heavily polluting industries partially offset the negative impact of strategic deviation on corporate green innovation. This study contributes to the growing literature on the economic consequences of strategic deviation and has policy implications for promoting corporate green innovation.