Digitalization and agricultural businesses’ environmental sustainability

This study examines how digitalization impacts agricultural businesses’ environmental sustainability, focusing on the mediating influence of breakthrough and incremental technological innovations. Using panel data with 2874 firm–year observations across Chinese agricultural enterprises spanning 2008–2022, digitalization enhances green total factor productivity through direct and indirect pathways. We validate our analysis using multiple econometric approaches including instrumental variables, propensity score matching, and Heckman selection models, revealing that breakthrough and incremental innovations are key mechanisms in this relationship. Heterogeneity analysis demonstrates that digitalization’s effectiveness varies significantly across ownership structures and geographical regions. Nonstate-owned enterprises exhibit substantially stronger responses to digitalization, and eastern regions exhibit markedly greater effects than central and western regions. These variations reflect differences in organizational flexibility, market incentives, infrastructure development, and resource accessibility. The findings demonstrate how digitalization drives sustainability through technological breakthroughs and systematic operational improvement, emphasizing the relevance of contextual factors in shaping these relationships. This study offers valuable insights for policymakers seeking to design differentiated strategies that include ownership and regional considerations, and provides agribusiness managers with frameworks for leveraging digitalization to achieve environmental objectives in agriculture’s sustainable development.