Abstract:    The high-quality development of the energy conservation and environmental protection industry is a crucial driver for China to achieve the innovation-driven strategy and green low-carbon transformation. However, it remains unclear whether China′s policies on energy conservation and environmental protection industries produce a resource compensation effect or a crowding-out effect on corporate technological innovation. Moreover, how a firm′s strategic innovation behavior influences its choice of different types of innovation is still a subject of investigation. This study addressed these questions by using the promulgation of the Opinions on Accelerating the Development of the Energy Conservation and Environmental Protection Industry as a natural experiment and employing the difference-in-differences method to empirically examine the effects and mechanisms of these policies on firm innovation. We found that energy conservation and environmental protection policies generate a "resource compensation effect" on non-green technological innovation activities. However, firms often strategically pursue non-green innovation in response to government support, leading to a "crowding-out effect" on green innovation. Furthermore, industry policies have yet to effectively elevate public environmental awareness. R&D investment serves as a crucial transmission factor for the strategic non-green innovation effects induced by these policies. Finally, small-scale enterprises and firms in more market-oriented regions are more significantly affected by policy interventions concerning innovation activities. However, their motivation for substantive and green innovation is weak. This paper will provide important insights for formulating and implementing more robust policies for the energy conservation and environmental protection industry.

Key words:  industrial policy, energy conservation and environmental protection industry, enterprise technological innovation, strategic behavior