Making Sustained Green Innovation in Firms Happen: The Role of CEO Openness

Abstract

Sustained green innovation in firms is a crucial driver of sustainable economic development. Chief executive officer (CEO) openness, as a key personality trait related to leadership effectiveness, has an important but largely overlooked impact on sustained green innovation. This study aims to explore the impact of CEO openness on sustained green innovation and its boundary conditions. Using data from Chinese A-share-listed firms between 2011 and 2023, we find that CEO openness has a significant positive impact on sustained green innovation in firms. The moderating effects reveal that both digitalization level and CEO shareholding strengthen the positive effect of CEO openness on sustained green innovation. Heterogeneity analysis indicates that this positive effect is more pronounced in state-owned enterprises, firms in non-heavily polluting industries, and those with high analyst coverage. These findings provide theoretical support for understanding the determinants of sustained green innovation through the lens of CEO personality. They also enrich the growing literature on the impact of CEO openness on corporate decision-making. Furthermore, this study recommends that firms prioritize CEO openness in selection, enhance digital infrastructure, and improve equity incentive measures to ultimately foster sustained green innovation.

1. Introduction

As climate change intensifies, resources deplete rapidly, and air pollution spreads, global economic development is confronted with unprecedented ecological challenges. In response to these pressing issues, pursuing sustainable economic development has become a widely accepted consensus and strategic priority among nations worldwide [1]. China, as the world’s largest carbon emitter, has actively embraced its environmental responsibilities. It has set strategic targets to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. These commitments offer both strategic insights and governance approaches to sustainable development. As micro-level agents of economic activity, firms play a crucial role in advancing China’s dual-carbon goals through the implementation of green innovation practices [2]. However, green innovation is marked by high uncertainty and lengthy development cycles [3]. To strike a long-term dynamic balance between economic growth and environmental benefits, firms must adopt a forward-looking perspective and engage in sustained green innovation to secure a lasting competitive advantage in the global green economy [4]. Therefore, how to effectively promote sustained green innovation in firms has become an important topic with both significant theoretical value and practical implications.

Sustained green innovation refers to a firm’s continuous implementation of newly introduced or developed green technologies, processes, and systems in accordance with the requirements of sustainable development [5,6]. Compared to green innovation, sustained green innovation emphasizes firms’ long-term engagement in environmentally friendly innovation within the broader framework of sustainable development [7]. It is characterized by two distinct features: temporal sustainability, reflected in the persistent continuation of green innovation activities, and dynamic accumulation, manifested in the ongoing buildup of green innovation outcomes over time. Scholars have explored various determinants of sustained green innovation, with existing studies focusing on factors such as green finance [8]; supply chain digitalization [4]; and environmental, social, and governance (ESG) performance [6]. While these studies offer valuable insights into the external antecedents of sustained green innovation, they tend to overlook internal organizational drivers. In practice, the implementation of sustained green innovation is not only shaped by external environmental conditions but also heavily influenced by the strategic motivations and decisions of corporate managers. According to upper echelons theory, executives’ personal traits and psychological characteristics significantly influence strategic choices and firm performance [9]. Sustained green innovation, as a form of strategic decision-making, aligns with this theoretical perspective. Consistent with the core tenets of upper echelons theory, the chief executive officer (CEO), as the central leader and primary decision-maker within the top management team, holds a pivotal position in promoting sustained green innovation. Recent studies have shown that CEOs with an information technology background can positively influence sustained green innovation [10]. However, although existing research has begun to recognize the importance of CEO characteristics in influencing sustained green innovation, limited attention has been paid to its determinants from the perspective of CEO personality.

The influence of CEO personality traits on corporate decision-making has become a central topic in contemporary research [11,12], as personality is regarded as a core component of leadership [13]. The Big Five personality framework, currently the most mature personality classification, encompasses openness, conscientiousness, extraversion, agreeableness, and neuroticism and is regarded as heritable and fairly stable personality traits [14]. Among these, prior research has identified CEO openness as a key personality trait related to leadership effectiveness [13,15], reflecting CEOs who possess high creativity, are adept at embracing uncertainty, and are willing to explore multiple possibilities [16]. An expanding body of literature underscores the benefits of CEO openness in breaking strategic inertia and improving firm performance [17,18]. CEOs with a high degree of openness are generally less inclined to maintain the status quo [19] and more willing to embrace intellectual innovation challenges. Open CEOs tend to possess sharp insight, proactively build and utilize external networks, challenge existing norms, and propose creative solutions, ultimately supporting firms’ long-term development in complex and dynamic environments [20]. As the global emphasis on sustainable development intensifies, examining the link between CEO openness and sustained green innovation in firms becomes increasingly important.

Moreover, trait activation theory asserts that the extent to which a decision-maker’s traits are activated varies significantly across different situational cues [21]. The theory highlights the critical role of the interaction between individual traits and situational factors in shaping behavior and has been increasingly applied in corporate management research [22,23]. It provides a solid theoretical foundation for analyzing how CEO openness influences sustained green innovation under specific situations. In particular, different situational cues may either enable or constrain the behavioral expression of CEO openness, thereby amplifying or mitigating its impact on sustained green innovation. Building on trait activation theory, we identify digitalization level and CEO shareholding as key situational factors that influence the behavioral manifestation of CEO openness, reflecting technological capability and incentive mechanism, respectively. Specifically, digitalization level refers to the extent and effectiveness of a firm’s application of digital technologies in its operations [24]. In the digital era, a firm’s level of digitalization not only shapes the strategic behavior of open CEOs but also affects how efficiently their decisions are implemented across the organization. Meanwhile, CEO shareholding is a long-term incentive mechanism that helps mitigate agency conflicts [25], aligns the interests of open CEOs with those of shareholders, and grants them greater autonomy in strategic decision-making. Therefore, these two factors may serve as critical enablers of the behavioral expression of CEO openness, representing important boundary conditions for understanding the relationship between CEO openness and sustained green innovation.

Building on the preceding analysis, the research aim of this paper is to investigate the impact of CEO openness on sustained green innovation in firms and to reveal its boundary conditions. Accordingly, the paper tries to answer the following research questions: (1) Does CEO openness affect sustained green innovation in firms? (2) If so, do the digitalization level and CEO shareholding moderate the relationship between CEO openness and sustained green innovation? To address these questions, we conduct an empirical analysis using a sample of Chinese A-share-listed firms from 2011 to 2023, examining the direct effect of CEO openness on sustained green innovation and the moderating effects of digitalization level and CEO shareholding on this relationship.

The main contributions of our study are as follows. First, we extend the literature on the determinants of sustained green innovation by introducing a CEO personality perspective. While existing research primarily examines the influence of external environmental factors [8,26] and organizational characteristics [27,28], evidence addressing managerial characteristics, particularly concerning CEO traits, remains limited. Unlike prior studies that examine the determinants of sustained green innovation from the perspective of time-varying CEO characteristics such as past experiences, we focus on CEO openness, a personality trait with greater stability. Our findings offer meaningful insights into how CEO characteristics influence sustained green innovation [10]. By framing corporate green innovation within the broader context of long-term sustainable development, our study offers new perspectives and insights into the determinants of sustained green innovation.

Second, we broaden the scope of research on the economic consequences of CEO openness for firms. Increasing evidence shows that CEO openness significantly influences firm strategic behavior [17], financial performance [18], and innovation performance [16]. However, in the context of the low-carbon transition, sustained green innovation has become increasingly critical, as it closely aligns with the fundamental goals of sustainable development. Despite its importance, the role of CEO openness in promoting sustained green innovation has received limited scholarly attention. By extending the application of upper echelons theory, our study enriches the literature on how CEO openness influences corporate decision-making. More precisely, our research contributes to the emerging literature on the impact of CEO openness on strategic choices and performance, providing new evidence for the relatively limited body of research on CEO openness in the field of sustained green innovation in firms.

Third, we reveal the boundary conditions under which CEO openness influences sustained green innovation. While previous research has emphasized the impact of CEO openness on corporate decision-making, limited attention has been given to how CEO openness varies across different situations [29]. In particular, recent studies call for greater attention on the interaction between CEO personality traits and situational factors to more comprehensively predict firm behavior [30]. Building on the extension of trait activation theory in corporate management, we examine two key dimensions, namely technological capability and incentive mechanism. Specifically, we identify digitalization level and CEO shareholding as important boundary conditions that influence the relationship between CEO openness and sustained green innovation. Our findings offer a more nuanced understanding of the conditions under which open CEOs are more effective in fostering sustained green innovation and provide a more comprehensive framework for interpreting the link between CEO openness and sustained green innovation in firms.

The remainder of this study is structured as follows. Section 2 reviews the relevant literature on sustained green innovation and CEO openness. Section 3 presents the theoretical analysis and hypothesis development. Section 4 describes the sample data, variables, and models. Section 5 reports the empirical results. Section 6 provides the research conclusions and the implications and limitations of this study.

2. Literature Review

2.1. Sustained Green Innovation

Sustained green innovation refers to a firm’s continuous implementation of newly introduced or developed green technologies, processes, and systems in accordance with the requirements of sustainable development [5,6]. Sustained green innovation closely aligns with the principles of sustainable development and serves as a critical means and practical pathway for achieving sustainable development goals. In contrast to green innovation, sustained green innovation emphasizes temporal continuity and the cumulative nature of green innovation efforts over time [6]. A growing body of research has examined the determinants of green innovation, including corporate governance [31], government support [32], CEO gender [33], climate risk [34], and environmental enforcement actions [35]. Importantly, the determinants of sustained green innovation have emerged as a new focal point in recent scholarly discourse.

Existing research has investigated the determinants of sustained green innovation from both external and internal perspectives. External factors primarily relate to the macro-institutional environment and the meso-level supply chain. At the macro level, the digital economy promotes sustained green innovation by lowering financing costs and improving resource allocation efficiency [26]. Green financial instruments have also been found to significantly enhance sustained green innovation, particularly when coupled with strong environmental regulations [8]. Policy pilot programs, such as national big data pilot zones, contribute to sustained green innovation through three key mechanisms: alleviating financial constraints, facilitating talent agglomeration, and driving industrial upgrading [36]. At the meso level, supply chain digitalization plays a critical role in improving firms’ sustained green innovation [4]. Studies of energy-intensive firms suggest that the stability risks associated with sustained green innovation are primarily transmitted to upstream suppliers [7]. Internal determinants have been explored through the lenses of organizational characteristics and managerial traits. Drawing on agency theory and incentive theory, prior research indicates that dividend payments influence sustained green innovation via a dual pathway involving agency costs and knowledge management capabilities [27]. Moreover, ESG performance, particularly its environmental dimension, has been shown to have a strong positive effect on sustained green innovation [6]. Digital transformation also significantly boosts sustained green innovation, and this effect is amplified by both employee and executive compensation mechanisms [28]. Notably, emerging studies have begun to explore the impact of CEO characteristics on sustained green innovation by drawing on upper echelons theory. For example, CEOs with an information technology background are better equipped to leverage corporate green resources, thereby enhancing sustained green innovation [10].

While the above studies offer valuable insights into the determinants of sustained green innovation in firms, evidence from the internal perspective, particularly in relation to managerial characteristics, remains relatively scarce. Although emerging research has begun to examine CEO characteristics, the focus has largely centered on CEOs’ information technology backgrounds, with limited attention given to more stable personality traits. Among these, CEO openness is especially relevant, as it is closely linked to leadership effectiveness, yet has been largely overlooked in existing studies.

2.2. CEO Openness

Openness, which originates from the field of personality psychology, reflects the personality traits of an individual with broad interests, who embraces change and challenges and who has imaginative and creative qualities [14]. Given the development of interdisciplinary integration, scholars in the field of management have begun to pay attention to the openness personality trait of corporate managers. As the core leader of enterprises, CEO openness is manifested mainly in a willingness to explore and embrace new ideas, challenge the status quo, and seek creative solutions [13].

According to the upper echelons theory, an increasing body of literature asserts that CEO openness has a significant impact on corporate strategic behavior and performance. Specifically, regarding strategic behavior, Datta et al. [19] conducted pioneering exploratory research revealing that open CEOs tend to disrupt strategic inertia, negatively impacting the persistence of a corporate strategy. Subsequently, Harrison et al. [30] utilized a large sample of data from S&P 1500 companies to demonstrate that CEO openness positively impacts corporate strategic change and urges scholars to focus on the differentiated influence of CEO personality traits on corporate strategic behavior in various situations. Recent studies have advanced this line of research by incorporating trait activation theory. Aabo et al. [17] found that the impact of CEO openness on corporate strategic flexibility depends on the CEO succession situation, highlighting the interaction between CEO personality traits and situational cues. With respect to corporate financial performance, Araujo-Cabrera et al. [15] argued that open CEOs enhance corporate financial performance by fostering behavioral integration within the executive team, aligning with recent research findings [18]. In terms of corporate innovation performance, Tan and Xia [16] found that CEO openness positively influences corporate innovation performance, as open CEOs encourage and support exploratory and exploitative innovation within enterprises. Furthermore, other scholars have discussed how CEO openness positively influences the degree of corporate internationalization [20] and downsizing decisions [29].

Overall, existing research has made valuable progress in examining how CEO openness influences corporate decision-making. However, although sustained green innovation is essential for achieving sustainable economic development, the impact of CEO openness on this outcome has received insufficient attention. Moreover, prior studies have indicated that the behavioral expression of CEO openness may vary considerably across different situations. Therefore, it is crucial to account for key situational factors that may influence the relationship between CEO openness and sustained green innovation in firms.

3. Theoretical Analysis and Research Hypotheses

3.1. Direct Effect of CEO Openness on Sustained Green Innovation in Firms

According to the upper echelons theory, executives’ individual characteristics shape their cognitive frameworks and value systems, which influence how they interpret and evaluate information. These differences lead to distinct managerial preferences and leadership styles, ultimately affecting strategic decisions and organizational performance [9]. Sustained green innovation refers to a firm’s continuous implementation of newly introduced or developed green technologies, processes, and systems in accordance with the requirements of sustainable development, thereby contributing to long-term performance and growth. Essentially, engaging in sustained green innovation is a strategic decision that is crucial for firms to secure a competitive advantage in the low-carbon era. In line with the upper echelons theory, the CEO, typically the most influential member of the top management team, plays a critical role in shaping the firm’s sustained green innovation through their individual traits. CEO openness is one of the typical personality traits, reflecting a willingness to embrace new ideas, challenge the status quo, and seek creative solutions. The higher the level of CEO openness, the better equipped firms are to adapt to complex and dynamic business environments, fostering long-term development [20]. Thus, based on the upper echelons theory, we argue that CEO openness significantly influences sustained green innovation in firms, as discussed below.

First, CEO openness enhances a firm’s willingness to engage in sustained green innovation. Open CEOs are characterized by sharp insights and a strong inclination to embrace and process diverse information [37]. Due to the time-sensitive and asymmetric nature of information, open CEOs are more likely to establish systematic mechanisms for gathering information and actively integrate and analyze data from multiple sources, such as policy documents, technical reports, and market intelligence [20]. This enhanced information processing capability enables firms to accurately interpret government environmental policy signals, monitor green technology trends, and identify green market opportunities in complex environments, thereby increasing their willingness to engage in sustained green innovation. Furthermore, open CEOs tend to be more risk-taking and receptive to new ideas, methods, and activities [38]. Given that sustained green innovation is often characterized by long investment cycles and high technological uncertainty [6], the risk-taking propensity of open CEOs allows them to better navigate the uncertainties and challenges in sustained green innovation. This, in turn, strengthens the firm’s risk tolerance and enhances its willingness to sustained green innovation [39]. Therefore, CEOs with higher openness, through their sharper insights and greater risk-taking propensity, help firms better align with green market orientations and increase their risk tolerance, thus promoting sustained green innovation.

Second, CEO openness facilitates the acquisition and integration of resources essential for sustained green innovation in firms. Open CEOs actively build and maintain diverse network relationships [16]. Given that sustained green innovation requires long-term resource investments, resource allocation becomes a critical constraint for firms pursuing sustained green innovation [8]. The network relationships cultivated by open CEOs represent a valuable asset that expands firms’ resource acquisition channels and supports the effective allocation of green resources. These networks not only assist firms in securing external funding and technological support but also promote collaboration with research institutions, partners, and industry leaders, providing the stable resource foundation necessary for sustained green innovation. Additionally, open CEOs are generally regarded as active listeners [40]. In the process of green innovation, they are adept at gathering feedback and suggestions from suppliers and customers, fostering technical exchanges and aligning demand between upstream and downstream firms. This enables firms to maintain mutually beneficial, long-term supply–demand relationships, enhancing their market adaptability and customer satisfaction throughout the green innovation process. It ensures that green products meet market demands precisely and supports the dynamic integration of resources essential for sustained green innovation. Thus, CEOs with higher openness, through their richer network relationships and greater willingness to listen, enhance firms’ resource allocation capabilities and establish stable supply chain relationships, ultimately driving sustained green innovation.

Third, CEO openness facilitates the strategic implementation of sustained green innovation in firms. Open CEOs are inclined to challenge the status quo and propose creative solutions [41]. Green innovation outcomes carry dual externalities of public knowledge and environmental protection [4], making it challenging for firms to overcome path dependency in technology choices. Open CEOs can break organizational inertia and technological path dependency by responding to changes in both internal and external environments, continually driving organizational innovation and strategic transformation [19]. This not only helps firms achieve incremental improvements in green technologies but also promotes breakthroughs and iterations, thereby facilitating the implementation of sustained green innovation. Additionally, open CEOs possess unique personal charisma and leadership appeal, which can inspire employees’ enthusiasm [42]. Sustained green innovation requires collaboration across departments such as research and development (R&D), marketing, and production, as well as active employee participation and continuous improvement [10]. Open CEOs are skilled at motivating employee involvement through leadership modeling, organizational learning, and incentivizing innovation [15]. This inclusive leadership style fosters trust in managers and organizational identification, creating an innovative atmosphere that encourages exploration and tolerates failure. It thus provides cultural support for sustained green innovation, enabling firms to implement it effectively. Therefore, CEOs with higher openness, through their creativity and stronger personal charisma, help firms reduce technological path dependency and cultivate a cultural environment conducive to sustained green innovation, thereby facilitating the strategic implementation of sustained green innovation.

Based on the analysis above, we propose Hypothesis 1 as follows:

Hypothesis 1. 

CEO openness has a significantly positive effect on sustained green innovation in firms.

3.2. Moderating Effects of Digitalization Level and CEO Shareholding

Whereas upper echelons theory provides a theoretical foundation for explaining the effect of CEO openness on sustained green innovation in firms, CEO behavioral manifestations do not exist in isolation from organizational situations. The existing literature emphasizes that the interaction between CEO openness and situational factors significantly enhances the explanatory and predictive power of corporate behavior [20]. We propose that digitalization level and CEO shareholding represent critical organizational situations that moderate the relationship between CEO openness and sustained green innovation in firms. Amid the rapid advancement of digital technologies, firms differ markedly in their adoption of digital tools, information processing capabilities, and intelligent collaboration systems. The digitalization level reflects a firm’s technological capabilities. Higher digitalization levels can better support open CEOs in recognizing and responding to strategic opportunities by enhancing access to relevant information and improving execution efficiency, thereby guiding the behavioral manifestations of open CEOs in sustained green innovation [43,44]. Meanwhile, the separation of ownership and control often creates agency conflicts between open CEOs and shareholders, potentially resulting in divergent decision-making perspectives and reduced autonomy. CEO shareholding, as an incentive mechanism, facilitates the alignment of interests between open CEOs and shareholders, thereby prompting open CEOs to demonstrate more proactive behavioral manifestations in strategic decision-making regarding sustained green innovation [45,46].

As discussed above, the digitalization level and CEO shareholding shape the behavioral motivations of open CEOs, thereby facilitating or constraining the impact of CEO openness on sustained green innovation in firms. According to trait activation theory, the extent to which implicit personality traits manifest in explicit behaviors depends on relevant situational cues [21]. These situational cues either align with or contradict individual traits, thereby activating or suppressing their expression. Drawing on trait activation theory, we further explore how the digitalization level and CEO shareholding moderate the relationship between CEO openness and sustained green innovation, aiming to gain a deeper understanding of this influence.

3.2.1. Moderating Effect of Digitalization Level

Digitalization level refers to the extent and effectiveness of a firm’s application of digital technologies in its operations, reflecting its technological capabilities [24]. In the digital economy, a firm’s digitalization level enhances decision-making by streamlining information acquisition and improving the efficiency of decision implementation [10]. Firms with a high digitalization level are typically equipped with advanced information technologies and digital tools. This higher level of digitalization significantly improves information accessibility and processing [44], enabling open CEOs to stay informed about real-time market trends, policy signals, and green technology developments. At this point, the keen insight and strong information processing abilities of open CEOs are activated and amplified, allowing them to identify green innovation opportunities more precisely and boosting their confidence and willingness to drive sustained green innovation. Moreover, highly digitalized firms often possess efficient internal processes, intelligent collaboration systems, and flexible organizational structures [43]. Such an environment provides robust technological support for open CEOs, facilitating smoother green R&D, supply chain collaboration, and market implementation while also enhancing the organizational receptiveness and ability to execute sustained green innovation strategies. Therefore, a higher digitalization level serves as an internal enabler that activates CEO openness and amplifies its influence on sustained green innovation in firms. In contrast, firms with a low level of digitalization face poor information flow and weak organizational coordination, hindering the ability of open CEOs to effectively integrate green resources and implement sustained green innovation strategies. In these cases, the behavioral expression of CEO openness is suppressed, potentially leading to frustration due to limited capabilities and resources, thereby weakening the effect of CEO openness on sustained green innovation in firms. Accordingly, we propose Hypothesis 2 as follows:

Hypothesis 2. 

Digitalization level has a positive moderating effect on the relationship between CEO openness and sustained green innovation in firms.

3.2.2. Moderating Effect of CEO Shareholding

CEO shareholding, as a long-term incentive mechanism, serves as an effective approach to mitigating agency issues between managers and shareholders [25]. CEOs with equity holdings assume both agent and steward roles within the firm, which helps align their interests with the goal of maximizing corporate value [45], thereby contributing to the firm’s long-term development. When CEO shareholding is high, open CEOs’ sense of organizational ownership increases, motivating them to take proactive steps to achieve the firm’s long-term goals through the psychological ownership effect. At this point, open CEOs are more likely to allocate innovation resources to long-term projects with significant social benefits, such as green initiatives. This long-term orientation aligns well with the sustainability feature of sustained green innovation, enhancing the willingness of open CEOs to promote it. Moreover, CEO shareholding helps mitigate resistance from the board of directors and major shareholders, thus expanding the decision-making space to some extent [46]. The successful implementation of sustained green innovation requires decision-makers to overcome organizational inertia and technological path dependence [10], making decisive actions necessary. When CEO shareholding is high, open CEOs face less supervision and fewer constraints, which increases their decision-making freedom. This autonomy facilitates strategic adjustments and efficient decision-making, allowing open CEOs to more effectively implement sustained green innovation. In contrast, when CEO shareholding is low, the reduced sense of ownership and limited decision-making freedom hinder open CEOs’ willingness to act, thereby limiting the impact of CEO openness on promoting sustained green innovation in firms. Therefore, CEO shareholding can be viewed as a positive situational factor that strengthens the effect of CEO openness on sustained green innovation. Accordingly, we propose Hypothesis 3 as follows:

Hypothesis 3. 

CEO shareholding has a positive moderating effect on the relationship between CEO openness and sustained green innovation in firms.

Building on the theoretical analysis and research hypotheses presented above, we propose a conceptual model in Figure 1 to more clearly illustrate the relationship between CEO openness and sustained green innovation, along with the moderating mechanisms.

4. Research Design

4.1. Sample Selection and Data Sources

We used data from Chinese A-share-listed firms covering the period from 2011 to 2023. The year 2011 was selected as the starting point due to data availability, following the release of the “International Patent Classification Green List” by the World Intellectual Property Organization (WIPO) in 2010. To ensure the reliability of the empirical analysis, we followed the approach of previous studies [10,47] and applied the following treatments to the initial sample: (1) exclusion of samples from the financial industry, (2) exclusion of samples labelled special treatment (ST) and particular transfer (PT), and (3) exclusion of samples with missing data. After screening, a final sample of 25,221 observations was obtained. To mitigate the impact of extreme values, all continuous variables were winsorized at the 1% and 99% levels. The data utilized in our study were obtained from the China National Intellectual Property Administration, the CSMAR database, and the CNRDS database.

4.2. Variable Definitions and Measurement

4.2.1. Dependent Variable

Sustained Green Innovation (SGI). Following prior research [28,48], we measure sustained green innovation by comparing the number of green patent applications across two consecutive periods, thereby capturing the inherent link between a firm’s past and current green innovation activities. Green patents refer to those that contribute to energy conservation, clean energy utilization, and environmental protection and are widely recognized as a reliable proxy for green innovation [49,50]. Given the lack of detailed data on green R&D expenditures, we adopt an output-based measure of SGI. Moreover, we use patent applications rather than granted patents, as the application-to-grant process typically involves significant time lags. Therefore, applications provide a timelier indicator of a firm’s sustained green innovation efforts. Specifically, we first calculate the growth rate of the sum of green patent applications in years t and t − 1 relative to the sum in t − 1 and t − 2. This growth rate is then multiplied by the total number of applications in years t and t − 1. Finally, a natural logarithmic transformation is applied to address scale differences. A higher value indicates a greater level of sustained green innovation. The specific calculation method is as follows:

$$SG{I}_{i,t}=\mathit{ln}\left[{\displaystyle \frac{G{P}_{i,t}+G{P}_{i,t-1}}{G{P}_{i,t-1}+G{P}_{i,t-2}}}\times \left(G{P}_{i,t}+G{P}_{i,t-1}\right)+1\right]$$

where, SGI_i,t denotes the sustained green innovation of firm i in year t. GP_i,t, GP_i,t−1, and GP_i,t−2 represent the number of green patent applications by firm i in years t, t − 1, and t − 2, respectively. These applications include both green invention patents and green utility model patents.

4.2.2. Independent Variable

CEO Openness (Open). As a psychological trait, CEO openness is not directly observable. Although the ideal approach would be to measure CEO openness through professional psychological assessments, such methods are challenging to implement in large-sample studies. Therefore, the existing research primarily relies on demographic characteristics as proxy variables for indirect measurement. Drawing from the measurement methods of Datta et al. [19] and Chen et al. [20], we select CEO education level, CEO age, and CEO tenure to measure CEO openness. Specifically, CEO education level is measured as the highest degree obtained by the CEO, CEO age is measured as the number of years from the CEO’s birth year to the observation year of the sample, and CEO tenure is measured as the number of months the CEO has served continuously in the firm. Based on the acquisition of the above data, the following steps are taken to calculate the following: First, assign values of 1 to 5 in ascending order to CEO education level, with five levels ranging from junior high school or below, junior college, bachelor’s degree, master’s degree, and doctoral degree. Second, take the opposite value for CEO age and CEO tenure to ensure that the three selected indicators have a positive impact on CEO openness. Third, separately standardize the transformed CEO education level, CEO age, and CEO tenure and, finally, sum the standardized values of the three indicators to obtain the value of CEO openness (Open). A higher value indicates higher CEO openness.

4.2.3. Moderating Variables

(1) Digitalization Level (Digital). The existing literature typically measures a firm’s digitalization level using two approaches: The first method calculates the frequency of digital-related keywords in annual reports [51,52], while the second computes the ratio of digital intangible assets to total intangible assets [43]. Our study argues that the first method, relying on textual disclosures in annual reports, may be subject to strategic manipulation by firms seeking to appeal to investors or reshape their corporate image, potentially overstating their actual digitalization level. In contrast, digital intangible assets are subject to accounting and financial verification, making them less prone to manipulation and a more objective, reliable indicator of the digitalization level. Therefore, we adopt the second method to measure the digitalization level of firms. Following Zheng et al. [53], we manually collect and verify the detailed intangible asset items disclosed in the financial statement notes of the sample firms. Specifically, intangible assets that include keywords such as “software”, “network”, “client terminal”, “management system”, “intelligent platform”, “information technology”, or “digital terminal” are categorized as digital intangible assets. The total value of digital intangible assets for each firm is then calculated by summing all such items for the same fiscal year. Finally, we compute the ratio of digital intangible assets to total intangible assets as the measure of a firm’s digitalization level, where a higher value indicates a greater level of digitalization.

(2) CEO Shareholding (Share). Following the approach of Sun et al. [54], we measure CEO shareholding as the ratio of the number of shares held by the CEO in the current year to the total number of shares outstanding in the firm. A higher value indicates higher CEO shareholding.

4.2.4. Control Variables

Drawing from existing research [10,26], we select the following control variables (CVs): CEO gender (Gender), CEO duality (Dual), shareholding of the top shareholder (Top1), board size (Board), firm size (Size), leverage (Lev), return on assets (ROA), cash flow ratio (Cash), total asset turnover (Ato), revenue growth rate (Growth), Tobin’s Q value (TobinQ), and regional development level (GDP). Additionally, considering differences across industries and years, we also control for industry fixed effects (Ind) and year fixed effects (Year).

Table 1. Control variable definitions.

Variables	Definition
Gender	Dummy variable equal to 1 if the CEO is male and 0 otherwise
Dual	Dummy variable equal to 1 if the chairperson and CEO are the same person and 0 otherwise
Top1	The proportion of shares held by the top shareholder
Board	The natural logarithm of the total number of board directors
Size	The natural logarithm of total assets
Lev	Total liabilities divided by total assets
ROA	Net profit divided by total assets
Cash	Net cash flow from operating activities divided by total assets
Ato	Revenue divided by average total assets
Growth	The change in revenue compared to the previous period, divided by the previous period’s revenue
TobinQ	Market value divided by book value of assets
GDP	The natural logarithm of provincial per capita GDP

Note: Italics indicate variable names in this and all following tables. Source: Own elaboration.

provides detailed definitions of these control variables.

4.3. Model Construction

To examine the direct effect of CEO openness on sustained green innovation in firms, we employ a panel data model with fixed effects following M. Liu et al. [28], as shown in Model (1):

$$SG{I}_{i,t}={\alpha }_0+{\alpha }_{1}O{pen}_{i,t}+\sum CVs+\sum Ind+\sum Year+{\epsilon }_{i,t}$$

(1)

To examine the moderating effects of digitalization level and CEO shareholding on the relationship between CEO openness and sustained green innovation, we follow prior research [8] and construct Models (2) and (3) as follows:

$$SG{I}_{i,t}={\alpha }_0+{\alpha }_{1}O{pen}_{i,t}+{\alpha }_{2}O{pen}_{i,t}\times Digita{l}_{i,t}+{\alpha }_{3}Digita{l}_{i,t}+\sum CVs+\sum Ind+\sum Year+{\epsilon }_{i,t}$$

(2)

$$SG{I}_{i,t}={\alpha }_0+{\alpha }_{1}O{pen}_{i,t}+{\alpha }_{2}O{pen}_{i,t}\times Shar{\mathrm{e}}_{i,t}+{\alpha }_{3}Shar{\mathrm{e}}_{i,t}+\sum CVs+\sum Ind+\sum Year+{\epsilon }_{i,t}$$

(3)

where SGI denotes the dependent variable sustained green innovation; Open denotes the independent variable CEO openness; Digital and Share denote the moderating variables digitalization level and CEO shareholding, respectively; CVs denotes all control variables; Ind and Year stand for industry and year fixed effects, respectively; ε_i,t is the error term; and α_i represents the parameters to be estimated.

5. Empirical Result Analysis

5.1. Descriptive Statistics

Table 2. Descriptive statistics.

Variables	N	Mean	Std. Dev.	Min	Max
SGI	25,221	1.2500	1.5629	0.0000	5.9556
Open	25,221	−0.0588	1.9361	−5.2933	3.8759
Digital	25,221	0.0912	0.2051	0.0000	1.0000
Share	25,221	0.0525	0.1096	0.0000	0.4991
Gender	25,221	0.9277	0.2590	0.0000	1.0000
Dual	25,221	0.3013	0.4588	0.0000	1.0000
Top1	25,221	0.3272	0.1472	0.0795	0.7482
Board	25,221	2.1157	0.1996	1.3863	2.8904
Size	25,221	22.2840	1.2674	19.9946	26.3980
Lev	25,221	0.4258	0.2014	0.0596	0.9042
ROA	25,221	0.0305	0.0676	−0.2846	0.1955
Cash	25,221	0.0476	0.0671	−0.1507	0.2381
Ato	25,221	0.5911	0.3892	0.0774	2.3496
Growth	25,221	0.1397	0.3591	−0.5741	2.0924
TobinQ	25,221	2.0719	1.3384	0.8292	8.6334
GDP	25,221	11.2973	0.4591	10.1824	12.2075

Source: Own calculations.

presents the descriptive statistics. The mean of SGI is 1.25, with a considerable range between the minimum value of 0 and the maximum value of 5.9556, indicating significant potential for improvement in firms’ levels of sustained green innovation. The mean of Open is −0.0588, with a standard deviation of 1.9361, suggesting substantial variation in the degree of openness among different CEOs. The descriptive statistics for the remaining variables show no notable abnormalities. Overall, these findings indicate favorable statistical distributions for the selected variables in this study.

5.2. Regression Results Analysis

Drawing on the research of Li and Luo [27], we use the statistical method of ordinary least squares (OLS) regression for our analysis. In addition, to eliminate potential impacts from differences across industries and years on our findings, industry fixed effects (Ind) and year fixed effects (Year) are included in all regressions.

Table 3. Regression results.

	(1)	(2)	(3)	(4)
Variables	SGI	SGI	SGI	SGI
Open	0.0347 ***	0.0350 ***	0.0289 ***	0.0262 ***
	(7.1293)	(8.0455)	(6.1937)	(5.4473)
Open × Digital			0.0744 ***
			(3.8718)
Digital			0.1559 ***
			(3.8423)
Open × Share				0.1935 ***
				(5.1323)
Share				0.3347 ***
				(3.5119)
Gender		0.1509 ***	0.1546 ***	0.1503 ***
		(5.1249)	(5.2432)	(5.0905)
Dual		0.0381 **	0.0370 **	0.0164
		(2.0288)	(1.9690)	(0.7749)
Top1		−0.2807 ***	−0.2749 ***	−0.2805 ***
		(−4.6453)	(−4.5484)	(−4.6210)
Board		0.0915 **	0.0910 **	0.0974 **
		(2.0409)	(2.0302)	(2.1735)
Size		0.6053 ***	0.6082 ***	0.6077 ***
		(64.5318)	(64.6695)	(64.2374)
Lev		0.1975 ***	0.1975 ***	0.2078 ***
		(3.8118)	(3.8137)	(4.0087)
ROA		0.4466 ***	0.4607 ***	0.4115 ***
		(3.1522)	(3.2554)	(2.8963)
Cash		−1.0949 ***	−1.0885 ***	−1.0892 ***
		(−8.1213)	(−8.0814)	(−8.0842)
Ato		0.0627 ***	0.0589 ***	0.0642 ***
		(2.7509)	(2.5809)	(2.8151)
Growth		−0.0887 ***	−0.0882 ***	−0.0921 ***
		(−3.8633)	(−3.8457)	(−4.0141)
TobinQ		0.0382 ***	0.0373 ***	0.0396 ***
		(5.4941)	(5.3625)	(5.6730)
GDP		0.2866 ***	0.2807 ***	0.2818 ***
		(12.7820)	(12.4648)	(12.4981)
_cons	0.2695 ***	−16.3012 ***	−16.3050 ***	−16.3222 ***
	(3.5277)	(−50.5906)	(−50.6410)	(−50.6742)
Ind	Yes	Yes	Yes	Yes
Year	Yes	Yes	Yes	Yes
Obs.	25,221	25,221	25,221	25,221
R-squared	0.0892	0.3054	0.3061	0.3073

Notes: (1) The bracketed numbers are t-values; (2) *** and ** indicate significance at the 1% and 5% levels, respectively. Source: Own calculations.

presents the regression results. The first two columns report the effect of CEO openness on sustained green innovation in firms. Column (1) controls only for industry and year fixed effects, and Column (2) adds all control variables on the basis of Column (1). The R² increases gradually from Column (1) to Column (2), indicating that incorporating control variables effectively enhances the model’s goodness of fit. The results in Column (2) show that the coefficient of Open is 0.035, significant at the 1% level, suggesting that CEO openness has a significantly positive effect on sustained green innovation in firms. Thus, Hypothesis 1 is supported.

Column (3) reports the moderating effect of digitalization level on the relationship between CEO openness and sustained green innovation. Building on Column (2), Column (3) incorporates the interaction term of CEO openness and digitalization level (Open × Digital), as well as digitalization level (Digital). The results indicate that the coefficient of Open × Digital is 0.0744, which is significant at the 1% level, suggesting that digitalization level has a positive moderating effect. Additionally, to further illustrate the effect of varying levels of digitalization on the relationship between CEO openness and sustained green innovation, we present Figure 2 based on the regression results. These analyses and the accompanying figure demonstrate that digitalization level significantly strengthens the positive effect of CEO openness on sustained green innovation in firms. Thus, Hypothesis 2 is supported.

Column (4) reports the moderating effect of CEO shareholding on the relationship between CEO openness and sustained green innovation. Building on Column (2), Column (4) includes the interaction term of CEO openness and CEO shareholding (Open × Share), as well as CEO shareholding (Share). The results show that the coefficient of Open × Share is 0.1935, which is significant at the 1% level, suggesting that CEO shareholding has a positive moderating effect. Furthermore, to provide a more intuitive illustration of the impact of varying CEO shareholding on the relationship between CEO openness and sustained green innovation, we present Figure 3. These findings show that CEO shareholding significantly strengthens the positive effect of CEO openness on sustained green innovation in firms. Thus, Hypothesis 3 is supported.

5.3. Endogeneity Checks

(1) Instrumental variable method. Previous analysis confirmed that CEO openness influences sustained green innovation. However, it is also possible that firms with higher levels of sustained green innovation tend to hire CEOs with greater openness. To address potential endogeneity arising from reverse causality, and following previous studies [16], we use the lagged value of CEO openness as an instrumental variable (IV) to further investigate the causal relationship between CEO openness and sustained green innovation. The first two columns of

Table 4. The results of the endogeneity checks.

	First-Stage	Second-Stage	PSM
	(1)	(2)	(3)
Variables	Open	SGI	SGI
IV	0.8409 ***
	(211.6485)
Open		0.0385 ***	0.0261 ***
		(6.1175)	(4.4316)
CVs	Yes	Yes	Yes
_cons	−0.4598 *	−16.5255 ***	−15.9637 ***
	(−1.7951)	(−48.4809)	(−35.8527)
Ind	Yes	Yes	Yes
Year	Yes	Yes	Yes
Obs.	19,741	19,741	13,381
R-squared	0.7151	0.2225	0.2970

Notes: (1) The bracketed numbers are t-values; (2) *** and * indicate significance at the 1% and 10% levels, respectively. Source: Own calculations.

present the results of the two-stage instrumental variable method. Column (1) displays the results of the first-stage regression, where the coefficient of IV is 0.8409 and significant at the 1% level, confirming the validity of the instrumental variable. Column (2) reports the results of the second-stage regression, where the coefficient of Open is 0.0385 and significant at the 1% level, consistent with previous findings. These results indicate that, even after addressing endogeneity concerns, CEO openness still promotes sustained green innovation in firms. Thus, Hypothesis 1 is supported once again.

(2) Propensity score matching (PSM). To further control for systematic differences arising from CEO openness, we employ PSM to address potential endogeneity concerns. First, CEOs are grouped based on whether their degree of openness exceeds the median within the same industry and year. Those with a degree of openness above the median constitute the treatment group, whereas the others constitute the reference group. Second, all control variables (CVs) are used as covariates, and matching is conducted following the nearest neighbor matching (1:1) principle. Balancing tests reveal that the standardized differences of all covariates after matching were less than 5%, indicating minimal significant differences in covariates between the treatment and reference groups, thus indicating a satisfactory matching effect. Finally, the matched sample is used to re-regress Model (1), with the results presented in Column (3) of Table 4. The coefficient of Open is 0.0261 and significant at the 1% level, providing further support for Hypothesis 1.

5.4. Robustness Checks

(1) Changing the measurement of the dependent variable. Green invention patents are considered to have higher technological content and practical value than green utility model patents. Therefore, we recalculate SGI using the number of green invention patent applications, following the method in Section 4.2.1 and the approach of previous studies [36], as an alternative measure of sustained green innovation. The regression results are presented in Columns (1)–(3) of

Table 5. The results of changing the measurement methods of key variables.

	Alternative Dependent Variable			Alternative Independent Variable
	(1)	(2)	(3)	(4)	(5)	(6)
Variables	SGI	SGI	SGI	SGI	SGI	SGI
Open	0.0310 ***	0.0249 ***	0.0251 ***	0.0306 ***	0.0252 ***	0.0224 ***
	(8.3015)	(6.2453)	(6.0509)	(7.2522)	(5.5542)	(4.7700)
Open × Digital		0.0719 ***			0.0632 ***
		(4.0607)			(3.4026)
Digital		0.2225 ***			0.1505 ***
		(5.9960)			(3.6741)
Open × Share			0.1357 ***			0.1746 ***
			(4.2592)			(4.7608)
Share			0.2686 ***			0.2770 ***
			(3.2966)			(2.9842)
CVs	Yes	Yes	Yes	Yes	Yes	Yes
_cons	−14.6356 ***	−14.6358 ***	−14.6539 ***	−16.2729 ***	−16.2724 ***	−16.2873 ***
	(−48.9023)	(−48.9655)	(−48.9679)	(−50.4860)	(−50.5214)	(−50.5444)
Ind	Yes	Yes	Yes	Yes	Yes	Yes
Year	Yes	Yes	Yes	Yes	Yes	Yes
Obs.	25,221	25,221	25,221	25,221	25,221	25,221
R-squared	0.2825	0.2840	0.2830	0.3051	0.3058	0.3057

Notes: (1) The bracketed numbers are t-values; (2) *** indicates significance at the 1% level. Source: Own calculations.

. The coefficients of Open, Open × Digital, and Open × Share are 0.031, 0.0719, and 0.1357, respectively, all of which are significant at the 1% level. These findings suggest that, even when an alternative measure of sustained green innovation is used, Hypotheses 1, 2, and 3 remain supported, thereby enhancing the robustness of our conclusions.

(2) Changing the measurement of the independent variable. Following the approach of Tan and Xia [16], we incorporate CEOs’ overseas experience as an additional indicator and recalculate CEO openness (Open) following the previously outlined steps. The regression results are presented in Columns (4)–(6) of Table 5. The coefficients of Open, Open × Digital, and Open × Share are 0.0306, 0.0632, and 0.1746, respectively, all of which are significant at the 1% level. After accounting for potential measurement errors in the independent variable, the conclusions of our study remain unchanged.

(3) Changing the econometric model. Since the data on sustained green innovation (SGI) exhibit a left-truncated distribution, following the approach of previous studies [6], we re-estimate Model (1) using the tobit model. The regression results are presented in Columns (1)–(3) of

Table 6. The results of changing the models and samples.

	Changing the Econometric Model			Changing the Sample Period
	(1)	(2)	(3)	(4)	(5)	(6)
Variables	SGI	SGI	SGI	SGI	SGI	SGI
Open	0.0617 ***	0.0509 ***	0.0442 ***	0.0362 ***	0.0307 ***	0.0303 ***
	(7.7522)	(5.9127)	(5.0305)	(7.5198)	(5.9594)	(5.6900)
Open × Digital		0.1393 ***			0.0704 ***
		(3.0027)			(3.2214)
Digital		0.1750 **			0.1622 ***
		(1.9638)			(3.6233)
Open × Share			0.4040 ***			0.1388 ***
			(5.4037)			(3.3180)
Share			0.8078 ***			0.3233 ***
			(4.5467)			(3.1075)
CVs	Yes	Yes	Yes	Yes	Yes	Yes
_cons	−27.7856 ***	−27.7728 ***	−27.8606 ***	−15.9133 ***	−15.9108 ***	−15.9342 ***
	(−48.0902)	(−48.0817)	(−48.2057)	(−44.2265)	(−44.2575)	(−44.2905)
Ind	Yes	Yes	Yes	Yes	Yes	Yes
Year	Yes	Yes	Yes	Yes	Yes	Yes
Obs.	25,221	25,221	25,221	20,413	20,413	20,413
R-squared	0.1089	0.1091	0.1093	0.2897	0.2904	0.2901

Notes: (1) The bracketed numbers are t-values; (2) *** and ** indicate significance at the 1% and 5% levels, respectively. Source: Own calculations.

, where the coefficients of Open, Open × Digital, and Open × Share are 0.0617, 0.1393, and 0.404, respectively, all of which are significant at the 1% level. We observe that the regression results using the tobit model are consistent with those of the previous tests, thus confirming the robustness of the conclusions drawn in our study.

(4) Changing the sample period. To account for potential disruptions to business operations caused by the COVID-19 pandemic, we conduct robustness tests by excluding observations from 2020 and 2021. The regression results are presented in Columns (4)–(6) of Table 6, where the coefficients of Open, Open × Digital, and Open × Share are 0.0362, 0.0704, and 0.1388, respectively, all of which are significant at the 1% level. These results indicate that, even after excluding the potential impact of the COVID-19 pandemic, the conclusions of our study remain robust.

5.5. Heterogeneity Analysis

5.5.1. Firm Ownership

Listed firms in China can be classified into state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs) based on their ownership structures. These two types of firms differ significantly in strategic objectives, operational priorities, and resource endowments [55], which may influence the role of CEO openness in promoting sustained green innovation. On the one hand, SOEs pursue both economic performance and social responsibility [56], with strategic decisions more closely aligned with national policies and environmental sustainability goals. This alignment offers broader scope and clearer guidance for the behavioral expression of CEO openness, thereby facilitating sustained green innovation consistent with green development objectives. In contrast, non-SOEs are primarily profit-driven and emphasize short-term financial performance, which imposes greater pressure on open CEOs and constrains their ability to fully leverage openness traits to advance sustained green innovation. On the other hand, SOEs enjoy stronger advantages in technological capabilities, human capital, and access to financing. Their political connections also enable better access to resources that support green innovation [6], such as R&D subsidies, green credit, and tax incentives, thereby providing strong support for the implementation of open CEOs’ initiatives. By contrast, non-SOEs often face financing constraints and limited resources [57], and they tend to struggle in attracting innovative talent. These limitations hinder open CEOs from overcoming environmental and resource barriers, thereby impeding the effective advancement of sustained green innovation. Therefore, the positive effect of CEO openness on sustained green innovation in firms is expected to be weaker in non-SOEs compared to SOEs.

To verify the analysis above, we divide the full sample into SOEs and non-SOEs, and the test results are presented in Columns (1) and (2) of

Table 7. The results of heterogeneity analysis.

	SOEs	Non-SOEs	Heavily Polluting	Non-Heavily Polluting	High Analyst Coverage	Low Analyst Coverage
	(1)	(2)	(3)	(4)	(5)	(6)
Variables	SGI	SGI	SGI	SGI	SGI	SGI
Open	0.1028 ***	0.0059	0.0090	0.0320 ***	0.0656 ***	0.0042
	(11.5415)	(1.2042)	(0.8994)	(6.7125)	(9.8775)	(0.7397)
	(13.8694)	(5.1685)	(7.0560)	(9.9055)	(6.7900)	(9.8389)
CVs	Yes	Yes	Yes	Yes	Yes	Yes
_cons	−19.0319 ***	−13.7555 ***	−21.7816 ***	−15.2187 ***	−16.2286 ***	−14.1296 ***
Ind	Yes	Yes	Yes	Yes	Yes	Yes
Year	Yes	Yes	Yes	Yes	Yes	Yes
Obs.	7788	17,433	5486	19,735	12,754	12,467
R-squared	0.4144	0.2437	0.4727	0.2923	0.3409	0.2064
Intergroup difference test	−0.097 *** [0.000]		0.023 ** [0.033]		−0.061 *** [0.000]

Notes: (1) The bracketed numbers are t-values; (2) *** and ** indicate significance at the 1% and 5% levels, respectively; (3) The values in [ ] are empirical p-values obtained via Fisher’s permutation test by self-sampling 1000 times. Source: Own calculations.

. The results indicate that the coefficient of Open is significantly positive at the 1% level, with a value of 0.1028, in the SOEs group. In contrast, the coefficient is positive but not significant in the non-SOEs group. Moreover, the empirical p-value obtained from Fisher’s permutation test by self-sampling 1000 times suggest that the effect of CEO openness on sustained green innovation differs significantly between SOEs and non-SOEs groups at the 1% significance level. Therefore, the positive effect of CEO openness on sustained green innovation is more pronounced in SOEs than in non-SOEs.

5.5.2. Industry Pollution Levels

Differences in pollution levels across industries result in significant variations in environmental regulatory pressure and technological complexity [26], which may lead to heterogeneous effects of CEO openness on sustained green innovation in firms. On the one hand, firms in heavily polluting industries face stringent environmental regulations and mandatory compliance requirements [28]. As a result, green innovation strategies driven by open CEOs are often constrained by institutional barriers, hindering their ability to maintain momentum. In contrast, firms in non-heavily polluting industries benefit from more relaxed environmental regulations, which grant them greater autonomy in strategic decision-making. This more flexible environment allows open CEOs to leverage their traits, such as exploring new ideas, embracing uncertainty, and advocating for change, thus fostering sustained green innovation aligned with market demand and long-term value. On the other hand, firms in heavily polluting industries typically rely on traditional, energy-intensive, and high-emission processes [58]. Sustained green innovation in such firms requires significant investment in costly and complex technological upgrades, making it difficult for open CEOs to overcome resource barriers, even with a strong commitment to sustained green innovation. Furthermore, firms in non-heavily polluting industries are more agile in technological adjustments and resource allocation, offering more favorable conditions for open CEOs to implement sustained green innovation in firms. In light of this, we speculate that the positive effect of CEO openness on sustained green innovation is likely to be more pronounced in non-heavily polluting industries compared to heavily polluting industries.

Building on existing research [59], we classify firms based on whether they belong to heavily polluting industries. Firms are assigned a value of 1 if their industry code corresponds to a heavily polluting industry and 0 otherwise. The results presented in Columns (3) and (4) of Table 7 indicate that, in the non-heavily polluting industry group, both the coefficient of Open and its significance level are higher compared to those in the heavily polluting industry group. Additionally, considering the empirical p-value from Fisher’s permutation test, there is a significant difference in the coefficient of Open between the groups with different levels of industry pollution at the 5% level. These findings are consistent with the previous analysis, suggesting that CEO openness has a more pronounced positive effect on sustained green innovation in firms within non-heavily polluting industries.

5.5.3. Analyst Coverage

As a crucial agent in external governance and information intermediation in capital markets [60], the level of analyst coverage varies significantly across firms, which may influence the relationship between CEO openness and sustained green innovation. On the one hand, in firms with high analyst coverage, continuous tracking of information and performance evaluations provide strong external oversight [61]. This oversight encourages open CEOs to prioritize the long-term sustainability of the firm, thereby promoting higher levels of sustained green innovation. In contrast, firms with low analyst coverage face less capital market supervision, and the decisions made by open CEOs lack sufficient external constraints. This absence of oversight can foster myopic behavior, which weakens their motivation to advance sustained green innovation. On the other hand, high analyst coverage is also linked to higher-quality information disclosure and improved communication mechanisms [62]. This transparency offers open CEOs an effective platform for external communication, allowing them to showcase progress in sustained green innovation through detailed disclosures, reduce information asymmetry, attract more investors, and secure additional resources, further supporting sustained green innovation. In contrast, firms with low analyst coverage experience greater information asymmetry, limiting their ability to attract external resources and financing, which, in turn, restricts open CEOs to promote sustained green innovation. Therefore, we expect that the positive effect of CEO openness on sustained green innovation will be more pronounced in firms with high analyst coverage.

To validate this inference, following the approach used in previous studies [63], analyst coverage is measured by the natural logarithm of one plus the number of research reports on the target company in one accounting year. The sample is categorized based on the annual industry median, where values greater than or equal to the median are assigned a value of 1, indicating high analyst coverage, and values below the median assigned a value of 0, indicating low analyst coverage. As shown in Columns (5) and (6) of Table 7, in the high analyst coverage group, the coefficient of Open is 0.0656, significant at the 1% level, while, in the low analyst coverage group, the coefficient is positive but not significant. The empirical p-value indicates differences in the coefficients of Open that are significant at the 1% level between the high and low analyst coverage groups. These results suggest that the positive effect of CEO openness on sustained green innovation is more prominent in firms with high analyst coverage.

6. Conclusions, Implications, and Limitations

6.1. Conclusions

Drawing on the upper echelons theory and trait activation theory, the research purpose of this paper is to examine the impact of CEO openness on sustained green innovation in firms, along with the moderating effects of digitalization level and CEO shareholding on this relationship. Based on a sample of Chinese A-share-listed firms from 2011 to 2023, the study presents the following key findings:

(1) CEO openness has a significantly positive effect on sustained green innovation in firms. The findings support that CEO characteristics are critical determinants of sustained green innovation in firms [10]. More importantly, it provides a new lens, based on CEO personality, to understand how CEO openness drives sustained green innovation. This research not only enriches the emerging literature on how CEO characteristics affect sustained green innovation but also provides new empirical evidence on the influence of CEO openness on corporate decision-making. Furthermore, the findings corroborate the argument that CEO openness benefits firms’ long-term development [20,37], thereby advancing our understanding of the upper echelons theory.

(2) The moderating effects reveal that both digitalization level and CEO shareholding strengthen the positive effect of CEO openness on sustained green innovation. These findings respond to the literature that emphasizes the interaction between CEO personality traits and situational factors for a more comprehensive prediction of firm behavior [30]. Furthermore, the findings address existing gaps by identifying situational cues through which CEO openness influences corporate decision-making [29]. Moreover, this evidence robustly supports the trait activation theory in explaining how the interaction between CEO openness and organizational situations affects sustained green innovation.

(3) Heterogeneity analysis reveals that the positive effect of CEO openness on sustained green innovation is more pronounced in state-owned enterprises, firms in non-heavily polluting industries, and those with high analyst coverage. The findings indicate that, although CEO openness promotes sustained green innovation, its impact varies depending on firm ownership, industry pollution levels, and analyst coverage. These results offer valuable insights into how CEO openness influences sustained green innovation across different types of firms.

6.2. Implications

Based on the findings of the aforementioned study, we draw practical implications as follows. First, integrating openness as a key criterion in CEO selection can significantly enhance a firm’s capacity for sustained green innovation. As the concept of sustainable development gains increasing importance, CEOs play a crucial role in driving sustained green innovation in firms. Therefore, boards should not only assess candidates’ business acumen and managerial experience but also consider openness as a critical personality trait when selecting a CEO. Psychological assessments and structured behavioral interviews can be utilized to evaluate candidates’ creativity, insight, networking skills, and ability to process information, helping identify CEOs with high levels of openness. This approach enables firms to better navigate uncertainty and complexity in green innovation, ultimately facilitating the successful implementation of sustained green innovation strategies.

Second, enhancing digital infrastructure is crucial for supporting open CEOs in driving sustained green innovation. Firms should prioritize investments in information infrastructure, intelligent data platforms, and digital systems to establish a comprehensive green data collection, analysis, and feedback network across the entire value chain. This digital infrastructure would provide open CEOs with real-time data on resource efficiency, emission control, and green project performance. Furthermore, firms should develop cross-departmental digital collaboration platforms to facilitate the efficient sharing and integration of information relevant to sustained green innovation. This will enable open CEOs to better monitor innovation trends; identify green opportunities; and ultimately enhance decision-making, resource allocation, and the execution efficiency of sustained green innovation strategies.

Third, improving equity incentive measures can stimulate the intrinsic motivation of open CEOs in driving sustained green innovation. By incorporating sustained green innovation into long-term strategic objectives and increasing open CEOs’ shareholding, firms can boost their willingness to invest and expand their decision-making autonomy in the innovation process. Compared to short-term compensation incentives, equity-based incentives are more aligned with the long-term nature of sustained green innovation, encouraging open CEOs to focus on valuable green technology R&D and the expansion of green businesses. This approach not only aligns open CEOs’ personal interests with the firm’s goals for sustained green innovation but also grants them greater decision-making autonomy, ultimately motivating them to commit to the long-term development and effective implementation of sustained green innovation.

Fourth, hiring open CEOs based on the firm’s specific situational factors ensures an effective match for promoting sustained green innovation. As sustained green innovation is a long-term and strategic endeavor, its implementation varies across different types of firms. Therefore, when selecting a CEO, firms must consider factors such as ownership structure, industry pollution levels, and analyst coverage and systematically assess how the CEO’s personality traits, particularly openness, align with the firm’s unique circumstances. Firms should adopt differentiated selection strategies tailored to their characteristics, ensuring that the personality traits of open CEOs contribute maximally to the successful implementation of sustained green innovation, thereby driving significant progress in sustainable development.

6.3. Limitations

This study may have the following limitations. First, we measure sustained green innovation by comparing the number of green patent applications across two consecutive periods, a method widely recognized and utilized in academic research. However, due to data availability constraints, this approach may have some limitations. As accounting systems continue to improve, the detailed disclosure of corporate green innovation R&D expenditures will become feasible. Future research could benefit from richer and more accurate data, leading to deeper and more comprehensive conclusions. Second, our measurement of CEO openness is inevitably imprecise. Given the difficulty in applying professional psychological assessments to large-sample studies, we adopt previously validated demographic indicators as proxy variables for CEO openness. While we believe this approach can yield generally meaningful results, it is not without limitations. We encourage future research to develop more direct and nuanced methods to better capture the personality trait of CEO openness. Third, our study focuses on the openness personality trait within the Big Five personality framework and confirms the positive effect of CEO openness on sustained green innovation in firms. We encourage future studies to explore additional CEO personality traits, such as conscientiousness, extraversion, agreeableness, and neuroticism, and their potential impact on sustained green innovation. Understanding these traits is essential for comprehending the determinants of sustained green innovation from the perspective of CEO characteristics.