ISSN: 2225-8329
Open access
Purpose: To review the latest domestic and international research (past five years) on how different types of environmental regulation-command-and-control, market-based, and voluntary-affect green technological innovation and corporate sustainability, and to propose an integrated analytical framework for understanding these mechanisms. Methodology: This study conducts a systematic literature review, synthesizing theoretical and empirical findings related to the nonlinear, heterogeneous, and complementary effects of environmental regulation on green technology innovation and firm performance. Findings: Environmental regulation significantly influences green innovation through diverse and nonlinear mechanisms. Moderate regulation generates innovation compensation effects, while overly stringent enforcement may restrain R&D investment. Different regulatory tools also demonstrate complementarity. The study proposes a multi-mechanism analytical framework and identifies future research directions related to digital governance, social equity, and institutional coordination. Research limitations: As a literature review focused on the past five years, the findings may be constrained by the scope of available studies and the evolving nature of environmental policies. Future research should further explore cross-regional heterogeneity and long-term dynamic impacts. Practical implications: Insights from the review help inform China’s effort to construct a balanced and efficient environmental regulatory system, offering guidance for improving green transition governance via digital tools, inclusive policy design, and coordinated institutional arrangements. Originality: This paper provides a comprehensive and updated synthesis of recent research, highlights the complementary mechanisms of varied regulatory tools, and introduces an integrated analytical framework that enriches the theoretical understanding of how environmental regulation shapes green innovation and corporate sustainability.
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