IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v33y2024i2p352-368.html
   My bibliography  Save this article

Digitalization transformation and ESG performance: Evidence from China

Author

Listed:
  • Yuzhong Lu
  • Cheng Xu
  • Bingsheng Zhu
  • Yanqi Sun

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.

Suggested Citation

  • Yuzhong Lu & Cheng Xu & Bingsheng Zhu & Yanqi Sun, 2024. "Digitalization transformation and ESG performance: Evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 352-368, February.
    • Handle: RePEc:bla:bstrat:v:33:y:2024:i:2:p:352-368
    DOI: 10.1002/bse.3494
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.3494
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.3494?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Pier Giacomo Cardinali & Pietro De Giovanni, 2022. "Responsible digitalization through digital technologies and green practices," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 984-995, July.
    2. Wen, Huwei & Zhong, Qiming & Lee, Chien-Chiang, 2022. "Digitalization, competition strategy and corporate innovation: Evidence from Chinese manufacturing listed companies," International Review of Financial Analysis, Elsevier, vol. 82(C).
    3. Zhong, Xi & Ren, Ge, 2023. "Independent and joint effects of CSR and CSI on the effectiveness of digital transformation for transition economy firms," Journal of Business Research, Elsevier, vol. 156(C).
    4. Haowen Tian & Gaoliang Tian, 2022. "Corporate sustainability and trade credit financing: Evidence from environmental, social, and governance ratings," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1896-1908, September.
    5. Pedro Solana-González & Adolfo Alberto Vanti & María Matilde García Lorenzo & Rafael E. Bello Pérez, 2021. "Data Mining to Assess Organizational Transparency across Technology Processes: An Approach from IT Governance and Knowledge Management," Sustainability, MDPI, vol. 13(18), pages 1-17, September.
    6. Pengyu Chen & Yuanyuan Hao, 2022. "Digital transformation and corporate environmental performance: The moderating role of board characteristics," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1757-1767, September.
    7. Valentina Lagasio & Nicola Cucari, 2019. "Corporate governance and environmental social governance disclosure: A meta‐analytical review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(4), pages 701-711, July.
    8. Fang, Mingyue & Nie, Huihua & Shen, Xinyi, 2023. "Can enterprise digitization improve ESG performance?," Economic Modelling, Elsevier, vol. 118(C).
    9. René Bohnsack & Christina M. Bidmon & Jonatan Pinkse, 2022. "Sustainability in the digital age: Intended and unintended consequences of digital technologies for sustainable development," Business Strategy and the Environment, Wiley Blackwell, vol. 31(2), pages 599-602, February.
    10. Hu, May & Xiong, Wanfang & Xu, Cheng, 2021. "Analyst coverage, corporate social responsibility, and firm value: Evidence from China," Global Finance Journal, Elsevier, vol. 50(C).
    11. Yingjia Zhong & Hongyan Zhao & Tianbao Yin, 2023. "Resource Bundling: How Does Enterprise Digital Transformation Affect Enterprise ESG Development?," Sustainability, MDPI, vol. 15(2), pages 1-18, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yin, Zhujia & Deng, Rantian & Xia, Jiejin & Zhao, Lili, 2024. "Climate risk and corporate ESG performance: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 74(C).
    2. Li, Junjun & Wu, Tong & Hu, Boqiang & Pan, Dongliang & Zhou, Yaqiong, 2025. "Artificial intelligence and corporate ESG performance," International Review of Financial Analysis, Elsevier, vol. 102(C).
    3. Ruan, Lei & Li, Jianing & Huang, Siqi, 2024. "News or noise? ESG disclosure and stock price synchronicity," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    4. Peng, Shengnan & Liu, Chan & Wang, Ze & Ye, Zihan & Sun, Xialing & Tan, Zhanglu, 2024. "The impact of the carbon reduction policy effectiveness on energy companies' ESG performance," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    5. Yanfei Wu & Irina Ivashkovskaya & Galina Besstremyannaya & Chunfeng Liu, 2025. "Unlocking Green Innovation Potential Amidst Digital Transformation Challenges—The Evidence from ESG Transformation in China," Sustainability, MDPI, vol. 17(1), pages 1-30, January.
    6. Luo Zixu, 2024. "The Impact of Firm Digital Transformation on Environmental, Social, and Governance Performance: Evidence from China," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 18(1), pages 1-12.
    7. Da Gao & Linfang Tan & Yue Chen, 2025. "Smarter is greener: can intelligent manufacturing improve enterprises’ ESG performance?," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-12, December.
    8. Feifei Zhao & Zhipeng Han & Liguo Wang, 2024. "Digitization path to improve ESG performance: A study on organizational perspectives," PLOS ONE, Public Library of Science, vol. 19(12), pages 1-20, December.
    9. Xiangwei Xie & Hongyu Zhu & Jinjing Zhao, 2024. "How effective is digital transformation? Heterogeneous insights from listed companies’ ESG performance," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    10. Wang, Xiaoteng & Zhou, Bole & Li, Xiaoling, 2025. "Qualified foreign institutional investors and corporate ESG performance: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 101(C).
    11. Tian, Ye & Zhao, Mengyang, 2025. "Does managerial climate risk perception improve environmental, social and governance (ESG) performance? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 102(C).
    12. Caiming Nie & Dor Kushinsky & Ting Ren, 2025. "Digital Transformation, CEO Compensation, and ESG Performance: Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 17(9), pages 1-23, April.
    13. Hao, Pu & Alharbi, Samar S. & Hunjra, Ahmed Imran & Zhao, Shikuan, 2025. "How do ESG ratings promote digital technology innovation?," International Review of Financial Analysis, Elsevier, vol. 97(C).
    14. Jingzhuo Yu & Yong-Sik Hwang, 2024. "The Interaction Effects of Board Independence and Digital Transformation on Environmental, Social, and Governance Performance: Complementary or Substitutive?," Sustainability, MDPI, vol. 16(20), pages 1-26, October.
    15. Chen, Yuanyuan & Jiang, Ellen Jin & Mo, Phyllis Lai Lan, 2025. "Does a founder’s cultural imprint affect corporate ESG performance?," Research in International Business and Finance, Elsevier, vol. 76(C).
    16. Lai, Xiaobing & Quan, Lei & Guo, Chong & Gao, Xing, 2025. "Exploring the digital era: Has digital technology innovation reshaped investment efficiency in Chinese enterprises?," Research in International Business and Finance, Elsevier, vol. 75(C).
    17. Zhou, Xiaoyong & Li, Gaochao & Wang, Qunwei & Li, Yangganxuan & Zhou, Dequn, 2025. "Artificial intelligence, corporate information governance and ESG performance: Quasi-experimental evidence from China," International Review of Financial Analysis, Elsevier, vol. 102(C).
    18. Cao, Tiantian & Li, Weian & Zhang, Yaowei & Zheng, Minna, 2024. "Win–win or Lose–Lose? Dual logic, board factional faultlines, and ambidextrous innovation in state-owned enterprises," Technovation, Elsevier, vol. 137(C).
    19. Liu, Xiaoqian & Jia, You & Zhu, Conghao & Wang, Chang’an & Yao, Jian, 2025. "Policy-driven innovation: Does the renewable energy development initiative foster corporate innovation in renewable energy technologies?," International Review of Financial Analysis, Elsevier, vol. 102(C).
    20. Siqian Chen & Xin Leng & Kun Luo, 2024. "Supply chain digitalization and corporate ESG performance," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(4), pages 855-881, September.
    21. Ren, Hao, 2025. "ESG rating disagreement and corporate digital transformation," Finance Research Letters, Elsevier, vol. 75(C).
    22. Hao, Xiaoli & Sun, Qingyu & Li, Ke & Li, Peilun & Wu, Haitao, 2024. "Does environmental decentralisation improve ESG performance? Evidence from listed companies in China," Energy Economics, Elsevier, vol. 139(C).
    23. Hantao Liu & Xiaoyun Zhang & Yang He, 2025. "Digital Transformation and ESG Performance—Empirical Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 17(13), pages 1-23, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Kaleem Khan & Chunhui Huo & R. M. Ammar Zahid & Umer Sahil Maqsood, 2024. "The automated sustainability auditor: Does artificial intelligence curtail greenwashing behavior in Chinese firms?," Business Strategy and the Environment, Wiley Blackwell, vol. 33(8), pages 9015-9039, December.
    2. Zhang, Kaixia & Bu, Caiqi, 2024. "Top managers with information technology backgrounds and digital transformation: Evidence from small and medium companies," Economic Modelling, Elsevier, vol. 132(C).
    3. Guoen Xia & Zenghui Yu & Xuwu Peng, 2023. "How Does Enterprise Digital Transformation Affect Total Factor Productivity? Based on the Information Intermediary Role of Analysts’ Attention," Sustainability, MDPI, vol. 15(11), pages 1-22, May.
    4. Liu, Fengzhong & Liu, Xing, 2024. "Digital transformation is not a painless change:Evidence from corporate risk," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    5. Xiangyu Chen & Peng Wan & Zhefeng Ma & Yu Yang, 2024. "Does corporate digital transformation restrain ESG decoupling? Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    6. Xiangan Ding & Zhonglin Sheng & Andrea Appolloni & Mohsin Shahzad & Shaojie Han, 2024. "Digital transformation, ESG practice, and total factor productivity," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4547-4561, July.
    7. Changchun Zhu & Na Li & Jing Ma & Xiaobin Qi, 2024. "CEOs' digital technology backgrounds and enterprise digital transformation: The mediating effect of R&D investment and corporate social responsibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2557-2573, May.
    8. Shan Wu & Ying Li, 2023. "A Study on the Impact of Digital Transformation on Corporate ESG Performance: The Mediating Role of Green Innovation," Sustainability, MDPI, vol. 15(8), pages 1-17, April.
    9. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).
    10. Zhao, Zeru, 2024. "Digital Transformation and Enterprise Risk-Taking," Finance Research Letters, Elsevier, vol. 62(PA).
    11. Yuan Feng & Changfei Nie, 2024. "Digital technology innovation and corporate environmental, social, and governance performance: Evidence from a sample of listed firms in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3836-3854, September.
    12. Yang, Haiyan & Chen, Linlin & Zhang, Yuyu, 2024. "Political conformity and digital transformation: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1979-1997.
    13. Cai, Cen & Li, Yijia & Tu, Yongqian, 2024. "Big data capabilities, ESG performance and corporate value," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    14. Ayadi, Imen & Abderrahman, Jahmane, 2025. "The impact of economic policy uncertainty and digital integration on ESG practices in European companies," Research in International Business and Finance, Elsevier, vol. 76(C).
    15. Kesen Zhang & Bilal Ahmed & Ruping Wang & Baoying Gu, 2025. "The Influence of Internal Governance and External Legitimacy on Greenwashing: A Digitalization Perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(2), pages 4881-4909, February.
    16. Lin, Yongjia & Lu, Zhenye & Wang, Yizhi, 2023. "The impact of environmental, social, and governance (ESG) practices on investment efficiency in China: Does digital transformation matter?," Research in International Business and Finance, Elsevier, vol. 66(C).
    17. Zhang, Jiawei & Li, Yuan & Xu, Hanwen & Ding, Yi, 2023. "Can ESG ratings mitigate managerial myopia? Evidence from Chinese listed companies," International Review of Financial Analysis, Elsevier, vol. 90(C).
    18. Zhan, Huawang & Shen, Huayu & Guo, Hui, 2025. "Research on the impact of ESG scores on corporate substantive and strategic green innovation," Innovation and Green Development, Elsevier, vol. 4(1).
    19. Qiao, Penghua & Zhao, Yuying & Fung, Anna & Fung, Hung-Gay, 2025. "How digital leadership guides ESG sustainability," Research in International Business and Finance, Elsevier, vol. 73(PB).
    20. Lai, Xiaobing & Yue, Shujing & Guo, Chong & Gao, Peng, 2024. "Unleashing global potential: The impact of digital technology innovation on corporate international diversification," Technological Forecasting and Social Change, Elsevier, vol. 208(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:33:y:2024:i:2:p:352-368. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.