ABSTRACT As environmental regulations intensify and the demand for green transformation grows urgent, firms face critical choices in adopting innovation strategies to address institutional pressures and achieve sustainable development. This study investigates how command‐based and market‐based environmental regulations differentially affect symbolic and substantive green innovation, whereas exploring the moderating roles of top management's focused and divided green attention configurations. Drawing on institutional theory and the attention‐based view, we propose that command‐based regulation more strongly promotes symbolic green innovation, whereas market‐based regulation more effectively drives substantive green innovation, and that the two regulation types exert synergistic effects on both innovation dimensions. Data were collected from 352 Chinese firms through a time‐lagged survey design. The results show that command‐based regulation has a stronger positive effect on symbolic green innovation, whereas market‐based regulation more strongly boosts substantive green innovation. The two regulation types also display complementary synergistic effects in fostering both forms of green innovation. Furthermore, focused green attention strengthens the link between command‐based regulation and symbolic innovation but weakens its link to substantive innovation. In contrast, divided green attention enhances the effect of market‐based regulation on substantive innovation while reducing its impact on symbolic innovation. These findings enrich institutional theory and the attention‐based view by revealing heterogeneous regulatory mechanisms and the critical cognitive boundary conditions in the regulation‐innovation process. The study offers practical guidance for managers to align innovation strategies and attention allocation with regulatory contexts and for policymakers to design effective regulation mixes that promote genuine green transformation in firms.
Dong et al. (Thu,) studied this question.
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