Journal of Cleaner Production 279 (2021) 123598

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Industrial collaborative agglomeration, marketization, and green

innovation: Evidence from China’s provincial panel data
Weiping Zeng a, Lin Li a, Yue Huang b, *
a
School of Economics and Trade, Hunan University, Changsha, 410079, China
b
School of Economics and Trade, Guangxi University of Finance and Economics, Nanning, 530003, China

a r t i c l e i n f o a b s t r a c t

Article history: The growth effect of collaborative agglomeration of manufacturing and producer service industries is
Received 27 November 2019 receiving increasing attention from scholars. However, few studies have explored whether and how
Received in revised form collaborative agglomeration of manufacturing and producer service industries affects green innovation.
24 July 2020
To bridge this gap, using the methods of the system generalized method of moments, the moderating
Accepted 1 August 2020
Available online 12 August 2020
effect, and the threshold effect, and employing the panel data of 30 provinces of China for 2003e2017,
this paper studies the effect of industrial collaborative agglomeration on green innovation and how this
Handling editor: Zhifu Mi influence fluctuates when marketization is included. The main findings are as follows: (1) During the
sample period, industrial collaborative agglomeration generally had a blocking effect on China’s green
Keywords: innovation. A 1% increase in industrial collaborative agglomeration indicated a 0.461% decrease in green
Industrial collaborative agglomeration innovation efficiency. (2) Marketization can be an essential and efficient factor to correct the negative
Marketization impact of industrial collaborative agglomeration through a moderating effect. (3) With the improvement
Green innovation of marketization, industrial collaborative agglomeration exhibits a U-shaped effect on green innovation,
Moderating effect
with the turning point occurring when the marketization index is 6.21. (4) As of 2017, 21 provinces have
Threshold effect
successfully exceeded the threshold of marketization, indicating that the current industrial collaborative
agglomeration has been able to effectively improve China’s green innovation efficiency. However, the
other nine provinces still trail behind them in marketization reforms, with industrial collaborative
agglomeration continuing to negatively affect green innovation. (5) This paper concludes with recom-
mendations to improve green innovation through industrial collaborative agglomeration and market
reform.
© 2020 Elsevier Ltd. All rights reserved.

1. Instruction
With the intensification of resource and environmental con-
straints, the promotion of economic sustainable development
becomes an inevitable choice all over the word, especially in large
developing countries (Huang and Wang, 2020). In such countries,
policymakers usually have two issues to address: one is what
should be done to improve green innovation, i.e., a new devel-
opment mode that couples innovative development and green
development (Angelo et al., 2012; Sezen and Cankaya, 2013;
Wurlod and Noailly, 2018), which is often used to identify those
innovations that contribute to maintaining a sustainable envi-
ronment through the development of ecological improvements
(Halila and Rundquist, 2011) for better performance of the econ-
omy and the ecological environment; the other is how to properly
evaluate the growth effect caused by industrial agglomeration,
especially industrial collaborative agglomeration, i.e., an
emerging agglomeration phenomenon that usually features in
manufacturing and producer service industries (Eswaran and
Kotwal, 2002; Guerrieri and Meliciani, 2005; Gao and Li, 2011)
and which offers more potential advantages and effects for better
economic growth.
To address these issues, scholars have made substantial efforts
to provide theoretical and practical references and experiences.
Previous literature asserts that green innovation makes growth
sustainable (Rennings, 2000; Aldieri et al., 2019a), exerts positive

* Corresponding author.
E-mail address: huangbeibeihenan@126.com (Y. Huang).

https://doi.org/10.1016/j.jclepro.2020.123598
0959-6526/© 2020 Elsevier Ltd. All rights reserved.
2 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598
effects on productivity in the medium-to-long run (Aldieri et al.,
2019b), and becomes a critical catalyst for sustainable develop-
ment (Rezende et al., 2019). Studies have also explored the factors
critical to the change to green innovation, such as environmental
regulation (Bitat, 2018; Feng and Chen, 2018; Brunel, 2019), tech-
nology transfer (Coppola, 2007; Schiederig et al., 2012; Zhang et al.,
2020), government subsidies and market maturity (Li et al., 2018;
Bai et al., 2019), and openness (Yang et al., 2018). For industrial
agglomeration, scholars endeavor to explore and focus on the scale
effect, industrial correlation effect, and knowledge spillover effect,
which could be treated as the growth effect derived from industrial
agglomeration (Chertow et al., 2008; Fan and Scott, 2009; Najkar
et al., 2020; Rahmawati and Romziatin, 2020). However, the rela-
tionship between these two issues has not yet attracted sufficient
attention from scholars, creating a research gap of exploring
whether and how industrial collaborative agglomeration affects
green innovation. Although previous papers have given consider-
able attention to the environmental effects of industrial agglom-
eration (Wu et al., 2014; Chen et al., 2020; Guo et al., 2020; Dong
et al., 2020), a comprehensive framework consisting of greenness,
innovation, and economic growth has eluded researchers. That is,
few papers have explored whether industrial collaborative
agglomeration is closely related to green innovation. This does not
benefit our understanding of the growth effect of industry
agglomeration, especially in countries that are facing serious
pollution and resource constraints. Our paper tries to bridge this
gap.
Moreover, industrial agglomeration is usually subject to
moderation by the market, such as the location and relocation of
enterprises. Thus, in a country where marketization reform d a
development process that makes the market play a decisive role in
resource allocation d is in action, industrial collaborative
agglomeration will probably be affected correspondingly. There-
fore, based on the above considerations, we employ marketization
as a critical variable to check whether and how marketization
moderates the process of assessing the effect of industrial collab-
orative agglomeration on green innovation.
This paper aims to address the following questions: (1) Has in-
dustrial collaborative agglomeration driven green innovation? If
yes, to what extent? If not, why? (2) Does marketization act as a
critical moderating variable for testing the influence of industrial
collaborative agglomeration on green innovation? (3) If marketi-
zation does matter in explaining the influence of industrial
collaborative agglomeration on green innovation, can we find
concise values and intervals in term of marketization. If yes, how
can we prove that? (4) What conclusions and implications can this
paper obtain?
The marginal contribution of this paper includes two main as-
pects. (1) This paper discusses the impact of industrial collaborative
agglomeration on green innovation, and elaborates the corre-
sponding mechanisms concerning how industrial collaborative
agglomeration affects green innovation. This adds value to the
theoretical and empirical exploration on the growth effect of in-
dustry collaborative agglomeration. (2) This paper explores the
moderating and threshold effect of marketization when the effect
of industrial collaborative agglomeration on green innovation is
studied. It could be regarded as a response to whether the market
reform benefits sustainable development in China and a theoretical
supplement to the previous papers to broaden the research scope
regarding the factors critical to green innovation.
The remainder of the paper is organized as follows: Section 2
presents the theoretical analysis and research hypothesis. Section
3 shows the methodology. Section 4 empirically analyzes the
regression results. Section 5 provides conclusions and policy
implications.
2. Theoretical analysis and research hypothesis
2.1. Industrial collaborative agglomeration and green innovation
Next, we illustrate how industrial collaborative agglomeration
affects green innovation in two heterogeneous respects.
On the one hand, industrial collaborative agglomeration char-
acterized by either being low level or having low efficiency prob-
ably induces a squeeze on the enterprise chain, inefficient
equilibrium, and resource misallocation, and then blocks green
innovation. Three possible channels are shown below.
(1) Currently, the local governments’ idea of “whatever enter-
prises bring is good” tends to be biased, and the government pol-
icies on industries are generally short-sighted. Some enterprises
are willing to hitchhike to seek “policy rent,” forming a simple
clustering phenomenon of “introduce enterprises only, but fail to
form an industry.” Such action leads to the supply chain and the
enterprise chain between industries experiencing difficulties in
development (Cheng et al., 2013), which creates a block on the
value chain of industrial collaborative agglomeration. (2) Moreover,
manufacturing enterprises located in the simple clustering of in-
dustrial agglomeration that derive from the above context tend to
adopt a more closed self-service mode, maintaining only shallow
level either point-to-point or point-to-group communications with
producer service enterprises, thereby limiting the development of
the producer service industry towards specialization. This “low
demand” and “low supply” tend to form “inefficient equilibrium,”
which makes it difficult to exert knowledge spillover and a
collaborative innovation effect within and between industries
(Zhang et al., 2017; Lin and Tan, 2019). (3) Further, a simple clus-
tering of industry is likely dominated by low-end manufacturing
and traditional productive service industries with weak innovation
power and low matching demand, so that innovation resources
cannot be allocated optimally. Innovative enterprises probably face
innovation difficulties derived from technical barriers, capital bar-
riers, scale economic barriers, organizational management barriers,
and market information barriers, which finally lead to a low-end
locking dilemma and resource misallocation effects.
However, on the other hand, industrial collaborative agglom-
eration is not always companied by a constraint effect, and it can
also foster and bring various effects, such as a scale effect, an in-
dustry correlation effect, and a spillover effect, in a demonstrative
role and then boost green innovation. There are four possible
channels described as follows: (1) The profit-seeking behavior of
market actors easily produces a scale effect, which is conducive to
the formation of a unified factor market and industry access
threshold, creating a producer service chain around the
manufacturing industry chain to achieve an improved double chain
because of the collaborative effect (i.e., better and efficient inter-
action). Then, the high-quality manufacturing and producer service
industries inevitably act as the primary industrial support to
enhance the green innovation level. (2) The manufacturing
agglomeration leads to market demands for a collaborative layout
with the producer service industry, which has a location locking
effect on the producer service industry and can effectively promote
its development. At the same time, the producer service industry
agglomeration can trigger the progress of the manufacturing in-
dustry through the output of both human and knowledge capital.
As asserted by Yang et al. (2016) and Solheim and Tveterås (2017),
the industrial correlation effect can significantly improve produc-
tion efficiency and management levels of the manufacturing and
producer service industries and then improve the regional green
innovation level in this process. (3) Regions with higher levels of
industrial collaborative agglomeration have more comparative
advantages in the knowledge frontier and green technology. Spatial
 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598
proximity is also conducive to frequent face-to-face interaction and
cooperation of professionals and the timely sharing of supply and
demand information, green technology, and business experience.
The continuous improvement in green innovation comes mainly
from technological progress and knowledge spillover. Conse-
quently, industrial collaborative agglomeration, aimed at facili-
tating knowledge-sharing and the technological spillover effect,
can drive continuous improvements in the regional green innova-
tion level (Ben Arfi et al., 2018). (4) Following the directions of
green transformation strategies and the directives set by environ-
mental regulations, the agglomeration area would lead in imple-
menting a green innovation path by relying on leading
manufacturing enterprises (which will inevitably require the
cooperation of service enterprises). The agglomeration area can
then promote the diffusion of innovative ideas and green technol-
ogy both internally and externally and play a demonstrative role for
small and medium-sized micro-enterprises to learn from and
imitate. Based on the above analysis, we propose Hypothesis 1.
Hypothesis 1. Industrial collaborative agglomeration affects
green innovation, but the regression symbol and direction are
uncertain.
2.2. Industrial collaborative agglomeration, marketization, and
green innovation
Next, we plug marketization into the analysis to briefly illustrate
the moderating effect. As a developing country, China is undergoing
a critical stage of development and transformation in terms of so-
ciety and economy, and there are great differences in the market-
ization process between different regions. Previous research shows
that the marketization degree directly affects the signing of con-
tracts and the cost of market transactions (Atuahene-Gima and Li,
2002), which probably changes the effect of industrial collabora-
tive agglomeration on green innovation.
On the one hand, as shown in institutional theory, an imperfect
marketization mechanism usually leads easily to weak awareness
of property rights’ protection, an opaque institutional environment,
corruption, and other problems, which, overall, finally exert a direct
negative impact on contract signing and market transaction costs.
In other words, as enterprises are the market entities of industrial
collaborative agglomeration, their micro decisions are bound to be
influenced by the market environment. Thus, when marketization
reform lags behind, the manufacturing and producer service in-
dustries in a cluster area may struggle to generate a scale effect, and
may also have a weak attraction for the leading enterprises and
gazelle enterprises to settle in the area, which leads to it being
difficult for manufacturing industry agglomeration and producer
service industry agglomeration to produce the collaborative effect.
Such a phenomenon constrains the improvement of green
innovation.
However, the reason why marketization may also play a positive
role in the impact of industrial collaborative agglomeration on
green innovation is that an optimized marketization mechanism
can create a good production and operation environment, reduce
market transaction costs, and then effectively drive the impact of
industrial collaborative agglomeration on green innovation.
With substantial market reforms, the market operation and the
space for collaborative agglomeration in the manufacturing and
producer service industries become more mature, resulting in
growth in the development scale of advanced manufacturing and
modern service industries. Once the efficient group-to-group
development mode of collaborative agglomeration is formed, it
produces several positive effects on improving regional green
innovation. Based on the above analysis, we propose Hypothesis 2
3
and 3.
Hypothesis 2. Marketization moderates the effect of industrial
collaborative agglomeration on green innovation.
Hypothesis 3. The impact of industrial collaborative agglomera-
tion on green innovation affected by marketization shows a
threshold characteristic.
To summarize, prior to the detailed illustration in the following
sections, we use a flowchart to explain the key logical idea per-
formed in this paper (Fig. 1).
3. Methodology
3.1. Method for evaluating the three key variables
3.1.1. Industrial collaborative agglomeration
Currently, methods for assessing collaborative agglomeration
vary. By referring the previous papers (Zhang et al., 2017; Li et al.,
2019), we employed an equation to evaluate the industrial collab-
orative agglomeration index. It is shown below.


jMAGGit  SAGGit j
COAGGit ¼ 1  þ ðMAGGit þ SAGGit Þ (1)
MAGGit þ SAGGit
where COAGGit describes the industrial collaborative agglomeration
index, MAGGit denotes the index of manufacturing industry
agglomeration. and SAGGit is the producer service industry
agglomeration index, both the MAGGit and SAGGit are calculated by
location entropy index. In particular, as is general practice in aca-
demic research (Waiengnier et al., 2019; Xie et al., 2019; Yang et al.,
2020), “scientific research and technical service industry”, “infor-
mation transmission, computer services, and software industry”,
“finance industry”, “transportation, warehousing, and postal in-
dustry”, and “leasing and business services industry” comprise the
producer service industry.
Additionally, the first part on the right-hand side of the equation
reflects the quality of the collaborative agglomeration index, and
the second part reflects the depth of the collaborative agglomera-
tion index. The higher the degree of industrial collaborative
agglomeration, the higher the quality and depth of collaborative
agglomeration.
3.1.2. Green innovation
In this study, green innovation efficiency, i.e., an inputeoutput
efficiency value under the constraints of resources and environ-
ment, is used as a proxy for evaluating green innovation. We know
that green innovation essentially focuses on the importance of
innovation to growth and the research and development of new
technologies (Chen et al., 2006; Fankhauser et al., 2013) and also
emphasizes the impact of the innovation process on the ecological
environment (Sezen and Cankaya, 2013; Wurlod and Noailly, 2018).
Therefore, in view of such analysis and the availability of research
data in existing papers (Gao et al., 2018; Li et al., 2018; Bai et al.,
2019), we calculate green innovation efficiency in the following
steps using the inputeoutput idea.
First, input variables: (1) R&D personnel input. This paper fo-
cuses on the labor variables highly correlated with innovation and
environmental protection. (2) R&D capital input. The R&D capital
input is measured by the R&D capital stock, which is estimated by
the perpetual inventory method (Berlemann and Wesselho € ft,
2014), and a depreciation rate of 15% is used. The internal expen-
diture of R&D funds is used as the original index for estimation, and
the R&D price index (0.45  fixed asset investment price
index þ 0.55  industrial producer ex-factory price index) is
4 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598
Fig. 1. The logical idea of this paper.
deflated using 2001 as the base period (Wu et al., 2018). (3) Energy
input. The energy input is measured using the total energy con-
sumption after being converted into standard coal.
Second, output variables. (1) Desirable outputs: patent appli-
cation numbers and new product sales’ revenue are selected as
desirable outputs. (2) Undesirable outputs: the environmental
pollution index designated as the undesired outputs is calculated
by an entropy-weighted method, and it consists of the volume of
industrial wastewater discharge, industrial waste gas emissions
(i.e., sulfur dioxide emissions), and industrial solid waste discharge.
Additionally, a super-SBM data envelopment analysis model
(see the method in the Appendix) improved by Tone (2001, 2002) is
used to measure the green innovation efficiency with the software
Max-DEA Pro 6.9.
3.1.3. Marketization
The “China marketization index” focuses on the marketization
degree during economic transition, which matches the character-
istics of China’s marketization process. This metric requires long-
term data, including detailed information for various provinces,
and it has been used widely in empirical research (Dai and Liu,
2013). Given that the latest version of China’s provincial marketi-
zation index (2018) issued by Wang et al. (2019) covers the period
of 2008e2016 and that our period of study of this paper is
2003e2017, the missing data had to be inferred and is calculated
based on Wang et al. (2019).
3.2. Econometric model
3.2.1. Baseline model
To verify the effect of industrial collaborative agglomeration on
green innovation, we set up the following econometric model:
GIEit ¼ b0 þ b1 COAGGit þ b2 PGDPit þ b3 RULEit þ b4 SUPPit þ mi
þ nt þ εit
(2)
where i is province, t is time, GIEit is green innovation efficiency,
and COAGGit is industrial collaborative agglomeration. In this
model, we employ three important control variables: economic
development level (PGDPit ), environmental regulation (RULEit ), and
governmental support (SUPPit ), where mi is regional effect, nt is time
effect, and εit is the random error term. Although the fixed effect
model can, to a certain extent, eliminate the influence of unob-
servable factors that do not change with time, endogenous prob-
lems caused by other unobservable factors are still likely to emerge:
for instance, the current status of green innovation in a certain
province is likely influenced by its previous level, which could lead
to discrepancies in fixed effect and mixed OLS estimation. There-
fore, we expand the model into its dynamic form by introducing the
lag termGIEi;t1 . The specific model is as follows:
GIEit ¼ b0 þ fGIEi;t1 þ b1 COAGGit þ b2 PGDPit þ b3 RULEit
þ b4 SUPPit þ mi þ nt þ εit (3)
To check this model, the system GMM method introduced and
improved by previous scholars is used (Arellano and Bover, 1995;
Blundell and Bond, 1998). Through this method, the endogeneity
problem in the dynamic panel model can be addressed effectively
(Abdulahi et al., 2019). The natural logarithmic form is adopted for
variables to reduce the heteroscedasticity in regression.
We now give brief reasons for our control variables. Economic
development level provides a material guarantee for carrying out
green innovation activities and also likely hinders green innovation
due to low quality of economic development. In this paper, per
 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598
capita GDP is used as the proxy variable of economic development
level. Environmental regulation has both a positive “innovation
compensation” effect and a negative “offset effect” on innovation,
which has been widely accepted by previous papers (Porter and
Linde, 1995; Brunnermeier and Cohen, 2003; Zhang et al., 2011).
The investment amount completed for pollution control is used to
evaluate the environmental regulation. Governmental support, to a
certain extent, can make up for the high R&D cost and risks from
externalities in innovation activities of green innovation enter-
prises. However, governmental investment may also bring a
crowding-out effect to enterprises, which would not be conducive
for improvements in green innovation (Wu et al., 2018). The pro-
portion of governmental financial science and technology expen-
diture in financial expenditure is taken as the proxy variable for
government support.
3.2.2. Moderating effect model
Next, we build the moderating effect model to explore
Hypothesis 2 to verify the moderating effect of marketization on
industrial collaborative agglomeration’s influence on green inno-
vation. Referring to Zawawi et al. (2017), the interaction term
COAGGit  MARKit of industrial collaborative agglomeration and
marketization is added to construct the model.
GIEit ¼ b0 þ fGIEi;t1 þ b1 COAGGit þ b2 COAGGit  MARKit
þb3 MARKit þ b4 PGDPit þ b5 RULEit þ b6 SUPPit þ mi þ nt þ εit
(4)
where the coefficient b2 is our key target; if it is statistically sig-
nificant, we believe that the moderating effect exists.
Moreover, we employ another approach, based on the research
of Wen et al. (2005), to provide more details of the moderating
effect. Specifically, the top ten provinces in China (i.e., Shanghai,
Jiangsu, Zhejiang, Guangdong, Beijing, Tianjin, Shandong, Fujian,
Chongqing, and Liaoning) in the average marketization index dur-
ing the research period are classified on the basis of having a higher
marketization index, and the other provinces are categorized on
the basis of having a lower marketization index. Thus, a group
regression is carried out to compare the coefficient differences of
industrial collaborative agglomeration between groups. If the dif-
ferences are statistically significant, this confirms the presence of a
moderating effect of marketization.
3.2.3. Threshold model
To check Hypothesis 3, we use a dynamic panel threshold model
to evaluate the threshold effect, in which model the marketization
index is the threshold variable and the industrial collaborative
agglomeration is the threshold dependent variable. The equation is
constructed as follows:
GIEit ¼ b0 þ fGIEi;t1 þ b1 COAGGit  IðMARKit  d1 Þ
þb2 COAGGit  IðMARKit > d1 Þ þ b3 PGDPit þ b4 RULEit þ b5 SUPPit
þ mi þ nt þ εit
(5)
whereIð $Þis an indicator function, and d is the threshold value to be
estimated. Model (5) is a single threshold model, from which a
multi-threshold model can be extended.
Considering that model (5) has the lagged term of the explained
variable and potential endogeneity, the conventional method for
estimating the static panel fixed effect model is no longer appli-
cable. Caner and Hansen (2004) offer an alternative approach to
solve the problem, which Huang and Dong (2013) implement in an
5
empirical study using Chinese samples. And this paper follows this
approach. First, system GMM is used to estimate the lagged term L:
ln GIEit and obtain its fitted value. The fitted value is then
substituted into model (5) as an instrumental variable of the lagged
term, which results in the endogenous problem being well
controlled. Second, the static panel threshold model is used to es-
timate the model after replacing the lag term to obtain the
threshold value (i.e., this step is only to obtain the threshold value,
and the estimated threshold coefficient is still not accurate). Finally,
after the threshold value has been obtained, the research samples
are divided into different areas. System GMM is used to estimate
the model of the portioned areas, and the threshold area estimation
coefficient is obtained when solving the endogeneity problem (i.e.,
there is no need to use the fitted value in the model at this time, and
the system GMM can effectively overcome the endogeneity).
3.3. Data
Due to incomplete data for Tibet, Hong Kong, Macao, and
Taiwan, the observed provinces are limited to 30 in China in
2003e2017. The data used in the study are derived from the
database of the EPS data platform (http://olap.epsnet.com.cn/
index.html), which is crosschecked with the China Statistical
Yearbook, the China Science and Technology Statistical Yearbook,
the China Torch Statistical Yearbook, and the China Environmental
Statistical Yearbook.
4. Empirical results
4.1. Unit root test and multicollinearity
Before conducting the regression analysis of all the models in
our paper, a unit root test of panel data and a test for multi-
collinearity are performed. To reduce the false regression and
ensure that the regression results are reliable and effective, we use
the LLC method proposed by Levin et al. (2002) to test the unit root
of each variable. As shown in Table 1, the test results of the LLC
method show that all variables are stable, because the original
hypothesis of “unit root” of these variables can be rejected at least
at the 5% significance level. In addition, the average value of the
variance inflation factor of each explanatory variable in the model
is 2.66, and the largest is 3.34, which is much less than 10, and, thus,
we can assert that no multicollinearity is found.
4.2. Analysis of baseline empirical results
The estimated results of the baseline model (equation (3)) are
shown in Table 2. Column 1 shows the regression results when
adding only the lagged term L:ln GIE and the core explanatory
variableln COAGG. The coefficient of L:ln GIE is positive and statis-
tically significant at the 1% level, indicating the presence of a lag
Table 1
Unit root and multicollinearity test results.
Variables LLC no time trend LLC time trend VIF
lnGIE 3.896*** 1.913**
lnCOAGG 3.099** 4.221*** 2.81
lnMARK 2.740*** 8.996*** 2.77
SUPP 2.490*** 1.848** 3.34
lnPGDP 10.099*** 8.387*** 2.49
lnRULE 5.483*** 3.139*** 1.89
Mean VIF 2.66
Notes: ***, **, and * denote statistical significance at the 1%, 5%, and 10%,
respectively.
6 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598

Table 2
The empirical results of the baseline model.

(1) (2) (3) (4) (5) (6)

SGMM SGMM SGMM DGMM SGMM FE

L.lnGIE 0.652*** (39.13) 0.600*** (26.97) 0.592*** (21.40) 0.407*** (36.70) 0.594*** (18.99)
lnCOAGG 0.095** (2.16) 0.461*** (6.56) 0.588*** (5.15) 1.867*** (15.24) 0.063*** (6.78) 0.941*** (2.81)
SUPP/lnTRANS 0.104*** (8.57) 0.075*** (9.97) 0.051*** (8.31) 0.137*** (10.99) 0.066*** (3.13)
lnPGDP 0.027*** (4.22) 0.109*** (5.87) 0.041** (2.40) 0.020*** (2.60) 0.417*** (3.79)
lnRULE 0.074*** (10.59) 0.060*** (8.72) 0.059*** (15.74) 0.070*** (7.85) 0.032 (1.20)
Constant 0.051 (1.59) 0.147 (1.57) 1.085*** (4.87) 1.741*** (6.39) 0.156 (1.21) 3.450*** (2.71)
Observations 450 450 450 450 390 450
AR(1) 0.021 0.017 0.015 0.033 0.022
AR(2) 0.653 0.635 0.749 0.838 0.607
R-squared 0.736
Sargan Test 0.576 0.413 0.668 0.367 0.634

Notes: The Z statistics are reported in parentheses. The AR (2) test indicates that there is no second-order correlation. The Sargan test shows that the instrumental variables are
valid. ***, **, and * denote statistical significance at the 1%, 5%, and 10%, respectively.

effect and inertia in the green innovation and that the current green innovation; this finding is line with Bai et al., 2019. The economic
innovation efficiency would be significantly affected by the previ- development level has a negative impact on green innovation,
ous one. The coefficient of ln COAGG is significantly negative at the which reflects the fact that most provinces in China blindly pursue
5% level, indicating that, during the study period, the current in- “GDP competition”, leading to low-quality economic development.
dustrial collaborative agglomeration does not promote the green The coefficient of environmental regulation is positively significant,
innovation efficiency. Column 2 shows that the coefficient of indicating that with enhanced environmental regulations, the
ln COAGG is still significantly negative when all the control vari- “innovation compensation” effect on green innovation exceeds the
ables are added. A 1% increase in industrial collaborative agglom- negative “offset effect” on enterprise innovation, and it then pro-
eration induces a 0.461% decrease in the green innovation motes the green innovation efficiency.
efficiency. This may be explained by the fact that construction of
industrial parks in China has been focused on “just bringing in” the
4.3. Results of marketization’s moderating effect and threshold
industry, aiming simply at conforming with the “political tourna-
effect
ment” of investment attraction. The lack of theoretical under-
standing about the development of the producer service industry
4.3.1. Moderating effect
chain around the manufacturing industry chain has meant that the
To check the moderating effect, we first use the system GMM to
industrial collaborative agglomeration remains superficial. Such a
make a regression estimation for model 4. The estimation results
phenomenon probably brings deficiency and environmental
are shown in column 1 of Table 3. The coefficient of ln COAGG is
pollution and constrains the improvement in green innovation.
negatively significant and is consistent with the previous analysis,
Moreover, the growth in high-end manufacturing and knowledge-
which further corroborates the negative effect of industrial
intensive producer service industries has been lagging, resulting in
collaborative agglomeration on green innovation in the research
an underdeveloped spatial carrier for industrial collaborative
period. The coefficient of the interaction term ln COAGG  ln MARK
agglomeration. These industries are in a state of “point to point” or
is positive and statistically significant at the 10% level. A 1% rise in
“point to group” development, which induces a considerable gap
the interaction term brings a 0.106% increase in the green innova-
compared with the “group to group” interactive development
tion efficiency.
mode. This inhibits the improvement of China’s green innovation
This proves that marketization is an essential factor in pro-
efficiency.
moting green innovation efficiency by mitigating the blocking ef-
Next, to verify the robustness of the baseline model, we test the
fect of industrial collaborative agglomeration. In other words, when
robustness by replacing the explanatory variables, exchanging the
marketization is observed in the economic development, industrial
regression method, and reducing the sample. Related regression
collaborative agglomeration and marketization can interaction
results are presented in columns 3e6. Column 3 shows the system
efficiently, with a positive effect on green innovation. Such results
GMM estimation results, in which governmental support (SUPP) is
are similar to those of the existing papers that marketization re-
replaced by technical market maturity (ln TRANS, indicated by the
form drives innovation ability and productive performance (Mao
contract amount of the technology market). Column 4 presents the
and Xu, 2015; Dai and Liu, 2020) and ecological environment (Lin
results when the system GMM is replaced with differential GMM
et al., 2013; Li, 2014; Liu and Xu, 2019), which finally drives green
(i.e., another regression method usually accompanied by system
innovation.
GMM). Column 5 shows the results of GMM estimation after de-
Columns 2e4 report the robustness test results for model 4.
leting four municipalities (i.e., Beijing, Tianjin, Shanghai, and
Column 2 shows the results of replacing system GMM with differ-
Chongqing). Column 6 shows the results of fixed effect panel data
ential GMM, column 3 shows the system GMM estimation results of
regression without considering the lagged term of the explained
replacing government support (SUPP) with technical market
variables. The results suggest that ln COAGG has a negative effect on
maturity (ln TRANS), and column 4 describes the estimation results
green innovation, confirming that the baseline model is robust.
of system GMM after excluding Beijing, Tianjin, Shanghai, and
Now, we briefly describe the regression results of the control
Chongqing. Overall, these findings demonstrate little difference in
variables. The positive relationship between governmental support
the significance level and magnitude, indicating a robust regression
and green innovation efficiency is found to be statistically signifi-
result in terms of the moderating effect.
cant. This indicates that governmental investment in science and
In addition, columns 5 and 6 provide the results of group
technology has a driving effect on society to carry out green
regression based on the marketization index. Column 5 shows that
innovation activities, which is conducive to improving green
the industrial collaborative agglomeration of the group with a low
 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598 7

Table 3
The estimation results of the moderating effect of marketization.

(1) (2) (3) (4) (5) (6)

SGMM DGMM SGMM SGMM SGMM SGMM

L.lnGIE 0.762*** (46.43) 0.568*** (30.37) 0.787*** (19.60) 0.653*** (50.09) 0.557*** (10.40) 0.980*** (4.37)
lnCOAGG 0.311*** (2.79) 0.598** (2.24) 0.496*** (4.33) 0.567*** (6.80) 1.133*** (2.80) 1.095* (1.82)
lnMARK 0.196*** (3.16) 0.371*** (2.66) 0.203** (2.14) 0.331*** (6.96)
lnCOAGG  lnMARK 0.106* (1.81) 0.281* (1.96) 0.175** (2.11) 0.160*** (3.46)
SUPP/lnTRANS 0.057*** (5.64) 0.093*** (6.65) 0.022* (1.88) 0.071*** (11.26) 0.111*** (3.85) 0.012 (0.73)
lnPGDP 0.085*** (5.51) 0.223*** (5.86) 0.154*** (5.90) 0.099*** (5.58) 0.041** (2.06) 0.010 (0.18)
lnRULE 0.006 (0.96) 0.040* (1.94) 0.012 (0.81) 0.029*** (4.88) 0.077*** (7.57) 0.051** (1.96)
Constant 0.107 (0.54) 0.352 (0.68) 0.087 (0.28) 0.119 (0.89) 0.815** (2.23) 1.342 (1.16)
Observations 450 450 450 390 300 150
AR(1) 0.025 0.029 0.027 0.032 0.033 0.030
AR(2) 0.312 0.308 0.344 0.282 0.616 0.233
Sargan Test 0.733 0.793 0.884 0.754 0.917 0.877

Notes: The Z statistics are reported in parentheses. The AR (2) test indicates that there is no second-order correlation. The Sargan test shows that the instrumental variables are
valid. ***, **, and * denote statistical significance at the 1%, 5%, and 10%, respectively.

marketization degree has a blocking effect on green innovation
efficiency. As industrial collaborative agglomeration increases by
1%, green innovation efficiency decreases by 1.133%. Column 6
shows that the high degree of the marketization group promotes
the green innovation efficiency significantly at the 10% level, which
proves that marketization has a positive moderating effect on the
correlation between industrial collaborative agglomeration and
green innovation. In summary, moving towards marketization can
eliminate the blocking effect of industrial collaborative agglomer-
ation on green innovation. Such a conclusion is robust and also
confirms Hypothesis 2.
4.3.2. Threshold effect
Based on the dynamic panel threshold model (equation (5)), the
single, double, and triple threshold assumptions with ln MARK as
the threshold variable are set one by one. Related information, such
as the F statistic, the P-value, the threshold value, and the confi-
dence interval are obtained. These are shown in Table 4, from which
it can be seen that the single threshold effect passes the test, and
the corresponding F statistics, P-value, threshold value, and confi-
dence interval are 13.51, 0.073, 1.826 and [1.807, 1.828], respectively,
but the double threshold and triple threshold are not statistically
significant.
Next, we proceed to the analysis. With the threshold variable
ln MARK, this paper utilizes system GMM to analyze the non-linear
threshold characteristics of industrial collaborative agglomeration
affecting green innovation (see Table 5). As seen from column 1 in
Table 5, the regression coefficient of ln COAGG passes the signifi-
cance test. However, the regression coefficients of ln COAGG in the
two stages (before and after the threshold) are in opposite di-
rections (first negative and then positive), indicating a U-shaped
curve relationship between industrial collaborative agglomeration
and green innovation efficiency. When the ln MARK is lower than
the threshold value, i.e., e1:826 ¼ 6:21, the effect of industrial
collaborative agglomeration on green innovation is significantly
negative at the 1% level. However, when the marketization index
reaches the threshold, the industrial collaborative agglomeration
gradually forms a proper scale, which has a significant positive
impact on green innovation. Thus, the blocking effect of industrial
collaborative agglomeration on green innovation declines gradually
with improvements in the marketization degree, and, when the
marketization index exceeds 6.21, the promotion effect on green
innovation efficiency is prominent. The spatial simple clustering
layout of the manufacturing and producer service industries has
typical negative externalities, and a positive agglomeration effect
and an improved green innovation level can be obtained only
through efficient collaborative agglomeration, which confirms
Hypothesis 3.
Further analysis shows that in the year 2017, the marketization
indices of nine provinces are still lower than the threshold value. As
the marketization reform in these provinces is relatively slow, it
does not exert an efficient moderating effect on the impact of in-
dustrial collaborative agglomeration on green innovation. In
contrast, in the other 21 provinces, where the marketization index
successfully exceeds the threshold during the research period, the
industrial collaborative agglomeration has positively affected the
green innovation. To sum up, generally, owing to the progress of
marketization, at the national level, industrial collaborative
agglomeration has been an engine of green innovation, but
disparity exists. This finding is similar to those in the existing
research (Li, 2014; Zhai and Liu, 2019).
Additionally, to verify the robustness of the non-linear threshold
characteristics of industrial collaborative agglomeration on green
innovation, we conduct another robustness check by deleting
control variables, replacing estimation methods, and substituting
explanatory variables. The estimation results are shown in columns
2e4 in Table 5. As can be seen, coefficients of key variables show
little difference in significance level and magnitude, implying a
reliable empirical result of the threshold model. The robustness test
confirms that with growing marketization degree, there is a
threshold feature of the impact of industrial collaborative
agglomeration on green innovation, showing a U-shaped curve.

Table 4
The test results of threshold effect.

Threshold type Threshold value F-statistics P-value Confidence interval Critical value

1% 5% 10%

Single-threshold 1.826 13.51*** 0.073 [1.807, 1.828] 21.029 15.217 12.026

Double-threshold 2.211 22.44*** 0.138 [2.187, 2.213] 37.822 19.185 12.406
Triple-threshold 2.243 18.82*** 0.597 [2.238, 2.245] 38.534 23.819 16.418

Notes: ***, **, and * denote statistical significance at the 1%, 5%, and 10%, respectively.
8 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598
Table 5
The estimation results of dynamic panel threshold model.
(1)
L.lnGIE 0.603*** (20.59)
lnCOAGG (lnMARK  1.826) 0.511*** (6.46)
lnCOAGG (lnMARK > 1.826) 0.119*** (4.79)
SUPP/lnTRANS 0.053*** (3.81)
lnPGDP 0.057*** (4.18)
lnRULE 0.071*** (10.47)
Constant 0.558*** (3.51)
Observations 450
AR (1) 0.014
AR (2) 0.653
Sargan Test 0.481
Notes: Column 2 shows the system GMM estimation results without adding control variables, Column 3 shows the estimation results when replacing system GMM with
differential GMM, and Column 4 shows the system GMM estimates when replacing government support (SUPP) with technical market maturity (ln TRANS). The AR (2) test
indicates that there is no second-order correlation. The Sargan test shows that the instrumental variables are valid. ***, **, and * denote statistical significance at the 1%, 5%,
and 10%, respectively.
5. Conclusion and policy implication
5.1. Conclusion
It is of great significance to understand the impact of industrial
collaborative agglomeration and marketization on green innova-
tion for exploring the determinants of green innovation in a
country, especially in a developing country, which is faced with
economic growth pressure and environment constraints and
strives for sustainable development. However, there is little evi-
dence about whether and how industrial collaborative agglomer-
ation and marketization affect green innovation.
This paper contributes to the existing literature by exploring the
impact of industrial collaborative agglomeration on green innova-
tion, in addition to the moderating effect and threshold effect of
marketization under the Chinese scenario, and it provides the
following insights: (1) Industrial collaborative agglomeration pro-
duces a blocking effect on green innovation efficiency; for the given
period, a 1% increase in the degree of industrial collaborative
agglomeration means a 0.461% decrease in green innovation effi-
ciency. That is, in China, the collaborative agglomeration of
manufacturing industry and producer service industry probably do
not benefit green innovation at present. (2) Marketization acts as an
important moderating variable in the process of evaluating the
impact of industrial collaborative agglomeration on green innova-
tion. On the one hand, it can weaken the negative effect of indus-
trial collaborative agglomeration impact on green innovation by
triggering and fostering efficient and improved industrial collabo-
rative agglomeration. On the other hand, the moderating effect of
marketization is verified and determined to have a threshold
characteristic, that is, a U-shaped curve is captured, indicating that
if policymakers want to foster and strengthen the positive influence
from industrial collaborative agglomeration for better green inno-
vation, an enlarged and optimized market reform is needed. (3)
Owing to the differentiated marketization degree in China, the
impact of industrial collaborative agglomeration on green innova-
tion varies across scenarios; i.e., it is a driver of green innovation in
most provinces because of the improved market system. However,
it does not exert a significant positive influence on the other
provinces with unmatured marketization.
5.2. Policy implication
The conclusions in this study provide policymakers with several
practical implications for better green innovation.
(2) (3) (4)
0.593*** (48.18) 0.429*** (18.72) 0.574*** (23.91)
0.299*** (6.28) 1.861*** (16.19) 0.666*** (6.44)
0.152*** (10.92) 0.098*** (6.74) 0.112*** (4.22)
0.042*** (9.13) 0.069*** (10.52)
0.068*** (3.96) 0.134*** (6.55)
0.058*** (13.63) 0.062*** (9.64)
0.037 (1.06) 2.003*** (7.66) 1.373*** (6.00)
450 450 450
0.017 0.023 0.017
0.710 0.843 0.787
0.491 0.441 0.581
(1) The construction of industrial collaborative agglomeration
should be effectively accelerated. In promoting the con-
struction of industrial parks, all regions should follow the
marketization evolution law of collaborative agglomeration
of manufacturing and producer service industries and adhere
to the “two-wheel-drive” strategy to release the promotion
effect of industrial collaborative agglomeration on green
innovation. On the one hand, policymakers should guide a
reasonable spatial layout of the manufacturing industry and
encourage qualified manufacturing enterprises to enlarge
the service sector and the value chain, just as shown in a
previous paper, supply chain collaboration has a very high
influence on green innovation performance (Yang and Lin,
2020). On the other hand, it is necessary to build a modern
productive service chain around the manufacturing industry
chain. Policymakers should also issue targeted support
measures in investment and financing, financial and tax
preferences, talent introduction, and other areas to create a
conducive environment for the producer service industry to
cluster around the manufacturing sector and expand its own
scale.
(2) Policymakers ought to further promote market reform. Our
paper further expands the conclusions that market orienta-
tion is closely related to economic performance (Ellis, 2006;
Vieira, 2010) and green innovation (Leal-Rodríguez et al.,
2017), which proves to us that there should be steadfast re-
form to achieve a higher marketization index. In terms of
basic principles, when formulating industrial development
policies, the government should jointly deploy industrial
collaborative agglomeration and marketization reform. In
other words, in the process of promoting collaborative
agglomeration of manufacturing and producer service in-
dustries, a series of measures of marketization reform should
be internalized into industrial collaborative agglomeration.
(3) Differentiated industrial policies and market policies need to
be formulated. Currently, the marketization index in China
varies distinctly, and each province should focus on its own
particular stage in determining the industrial support pol-
icies and marketization reform areas for development. For
those provinces that exceed the marketization threshold, the
marketization reform needs to be consolidated, and the in-
dustrial collaborative agglomeration needs to focus on the
transformation from extensive development to intensive
development. For those provinces do not exceed the
threshold marketization, policymakers should accelerate the
process of marketization reform and endeavor to foster some
 W. Zeng et al. / Journal of Cleaner Production 279 (2021) 123598 9

efficient and improved industrial collaborative agglomera- 8

tion parks. < 
P\ðx0 ; y0 Þ ¼ x; yg ; yb
:
 9
 =
 Xn Xn Xn
CRediT authorship contribution statement 
 x  g
m j xj ; y  g b
mj y ; y  b g
mj y ; y  0; m  0
 ;
j¼1 j¼1 j¼1
Weiping Zeng: Writing - original draft. Lin Li: Supervision, (7)
Proofread. Yue Huang: Writing - review & editing, Supervision.
Then, the fractional programming form of Super-SBM model
considering undesired output is as follows:

Declaration of Competing Interest 1 Xm

x
i
m i¼1 xi0
q ¼ min !
The authors declare that they have no known competing X
w1 X
w2
1 yg r ybl
financial interests or personal relationships that could have g þ g
w1 þ w2 r¼1 yi0 y
appeared to influence the work reported in this paper. l¼1 l0

X
n X
n X
n (8)
s:t:x  mj xj ; yg  mj ygj ; yb  mj ybj
j¼1; s0 j¼1; s0 j¼1; s0
Acknowledgments
X
n
We would like to thank the editor and anonymous reviewers for x  x0 ; yg  yg0 ; yb  yb0 ; mj ¼ 1; yg  0; m  0
their kindly and useful comments. We thank the Discipline Project j¼1; s0

of School of Economics and Trade of Guangxi University of Finance

and Economics (2020MA09), the Major Project of Hunan Social where q is the target efficiency, and other variables are consistent
Science Foundation of China (19ZWA38), the Doctoral Scientific with Equation (6). Compared with the traditional SBM model, the
Research Foundation of Guangxi University of Finance and Eco- Super-SBM model with undesired output has two obvious advan-
nomics (BS201968) for their support. tages in measuring green innovation efficiency: the efficiency value
of DMUs can exceed 1, and then the efficient DMUs can be ranked;
the relaxation of input-output variables is fully considered and
effectively solved (Kao, 2014).
Appendix
Appendix A. Supplementary data
Method for assessing the green innovation efficiency is shown
as below. Suppose there are n decision making units (DMU) in a Supplementary data to this article can be found online at
system, and each DMU contains three vectors: input X, desired https://doi.org/10.1016/j.jclepro.2020.123598.
output Y g , and undesired output Y b . The three vectors are defined
g g References
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