Inhibiting or promoting corporate digital technology usage: How do companies respond to climate risks?

The increasingly severe climate risks have become an important external shock, reshaping corporate operational strategies and technology choices. However, the relationship between climate risks and corporate digital technology usage (DTU) has not been sufficiently studied. Using panel data of Chinese listed firms from 2011 to 2023, this paper provides robust evidence that climate risk positively affects corporate DTU, i.e., a one-standard-deviation increase in climate risk leads to an average increase in corporate DTU of approximately 4.682%. Specifically, transition risks and acute physical risks both exert significant positive effects on DTU, whereas chronic physical risks show no substantial influence. Drawing on the resource-based view (RBV), we find that entrepreneurship and dynamic capabilities (intangible resources) strengthen this positive relationship, while unabsorbed slack resources (tangible resources) attenuate it. Heterogeneity analysis reveals that the positive effect of climate risk on corporate DTU is more pronounced for state-owned enterprises (SOEs), high-risk-taking enterprises (HRTEs), and enterprises with diversified supply chains. Further analysis on economic consequences indicates that climate risk-induced improvements in corporate DTU significantly enhance supply chain resilience and ESG performance. These findings show that DTU is an internal adaptation strategy for companies dealing with climate risks. This expands the traditional framework for understanding the drivers of corporate DTU, providing a new theoretical explanation for the “risk response motivation” behind this behavior. It also gives companies practical guidance and management insights for capturing the benefits of DTU in the face of climate risks.