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Female CEOs, digital transformation and green innovation of small and medium-sized enterprises

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  • Zhang, Meng-Chen
  • Wang, Guan

Abstract

In the context of China’s dual transition toward digitalization and green development, this study examines how digital transformation affects green innovation in small and medium-sized enterprises (SMEs). Using 2,701 firm-year observations of Chinese A-share listed companies from 2015 to 2022, we construct a multidimensional index of digital transformation and estimate its effect on green innovation with a dual fixed-effects model. Results show that digital transformation significantly promotes green innovation, and this relationship remains robust under instrumental variable estimation, Heckman correction, and alternative specifications. Mechanism tests reveal that digitalization advances green innovation through two channels: higher profitability and lower agency costs. Moreover, female executive representation strengthens this relationship, underscoring the role of leadership diversity in environmental initiatives. Heterogeneity analysis shows stronger effects among firms in central China, high-tech industries, and nonpolluting sectors. These findings highlight the strategic role of digital transformation in driving green innovation and provide evidence-based insights for policymakers seeking to foster sustainable development through the digital empowerment of SMEs.

Suggested Citation

  • Zhang, Meng-Chen & Wang, Guan, 2025. "Female CEOs, digital transformation and green innovation of small and medium-sized enterprises," Finance Research Letters, Elsevier, vol. 86(PD).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pd:s1544612325018604
    DOI: 10.1016/j.frl.2025.108606
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