Impact of the carbon trading policy on green technological innovation in heavily polluting enterprises: A circular operations perspective

This research explores how the carbon trading policy (CTP) affects green technological innovation (GTI) in heavily polluting enterprises from the circular operations perspective, contributing to the broader goal of sustainable supply chain development. Using a difference-in-differences model and firm-level panel data from 2004 to 2023, this study provides robust empirical evidence that the CTP significantly stimulates green innovation, underscoring its effectiveness in encouraging heavily polluting enterprises toward sustainable practices. Our findings further indicate that the policy exerts a stronger impact on enterprises located in first-tier cities and those with larger scale, whereas smaller firms and those in less-developed regions tend to respond less actively, primarily due to limitations in their innovation capacity. In addition, this study introduces a novel perspective by examining the moderating roles of contextual and organizational factors, including media supervision, public educational attainment, intellectual property protection, executive compensation, and equity concentration, which significantly influence the effectiveness of the policy. These findings offer new insights for policymakers to develop region- and enterprise-specific policies that effectively promote GTI, thereby supporting the transition to more resilient supply chains.