Digitalization transformation and ESG performance: Evidence from China

Yuzhong Lu · Cheng Xu · B. Zhu · Yanqi Sun

428 citations0/0 files storedBusiness Strategy and the Environment

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Digital Economy and Transformation Corporate Social Responsibility Reporting Governance, Compliance, and Sustainability

Abstract

Abstract The mechanisms underlying the relationship between firms' digitalization transformation and environmental, social, and governance (ESG) are underexplored. Using a sample of Chinese listed firms from 2011 to 2020, this research explores the mechanisms whereby digitalization affects firms' ESG performance. We found: (i) digitalization transformation can effectively promote firms' ESG performance; (ii) digital transformation promotes firms' ESG performance by enhancing internal control and green innovation; and (iii) the positive effects between digital transformation and ESG performance are more pronounced in non‐state‐owned‐enterprises (non‐SOEs) and firms of the manufacturing industry, and hi‐tech firms, as well as firms with a higher ratio of independent directors and higher analyst coverage. (iv) The government's supportive attitude towards industrial policy has a positive moderating effect on the impact of digital transformation on ESG performance, and the degree of marketization in the region where the firm is located has a negative moderating effect on the relationship between digital transformation and ESG performance. Our research deepens the understanding of the nuanced mechanism underlying the positive relationship between firms' digital transformation and their ESG performance.

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References

2012Green innovation in technology and innovation management – an exploratory literature review 2022Digitalization, competition strategy and corporate innovation: Evidence from Chinese manufacturing listed companies 2022Can enterprise digitization improve ESG performance?2022Digital transformation and sustainable performance: The moderating role of market turbulence 2019Corporate governance and environmental social governance disclosure: A meta‐analytical review 2022Digital finance and corporate ESG 2017Digital entrepreneurship: Innovative business models for the sharing economy

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