The Impact of Internal Control Effectiveness on Green Innovation in Heavily Polluting Industries

Abstract

With the carbon peak and carbon neutrality imperative as the overarching policy, as well as green development being elevated to national strategies, high-emission industries are facing mounting pressure to transform. Focusing on heavily polluting A-share listed firms in China across the years 2011 through 2023, the present study empirically assesses the contribution of internal control mechanism effectiveness to organizational environmental eco-innovation and deciphers the associated causal logic. The evidence indicates that superior internal control yields a significant and positive influence on propelling green innovation within these high-emission enterprises. This conclusion remains robust after tests for multicollinearity and heteroscedasticity. This study contributes to the body of knowledge on the antecedents of corporate green innovation from an internal governance perspective, but also provides practical guidance for heavily polluting enterprises to enhance green innovation capabilities and achieve sustainable development by optimizing their internal control systems.