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What makes government subsidies for green innovation more effective? The moderating effect of digital transformation and executive incentives

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  • Cong, Rong
  • Li, Sitan
  • Wang, Liya
  • Zhang, Boqun
  • Wang, Ya

Abstract

Drawing on the Technology–Organization–Environment (TOE) framework, this study examines how government subsidies (ES) influence strategic green innovation (StrGI) and substantive green innovation (SubGI) among 4575 A-share listed firms in China from 2010 to 2024. Results show that ES significantly promotes both StrGI and SubGI, with a stronger effect on StrGI. At the technological level, digital transformation breadth strengthens the ES–StrGI relationship but weakens its effect on SubGI, while digital transformation depth exhibits an inverted U-shaped moderation on ES–StrGI and a positive moderation on ES–SubGI. At the organizational level, executive equity incentives positively moderate both relationships, whereas executive compensation incentives only strengthen the ES–StrGI relationship. Further analyses reveal that ES effects are more pronounced in resource-constrained firms and regions with less stringent environmental regulations and that ES significantly facilitates the transition from StrGI to SubGI. By embedding institutional theory within the TOE framework, this study advances understanding of how policy instruments interact with technological and organizational contexts to shape green innovation.

Suggested Citation

  • Cong, Rong & Li, Sitan & Wang, Liya & Zhang, Boqun & Wang, Ya, 2026. "What makes government subsidies for green innovation more effective? The moderating effect of digital transformation and executive incentives," Technology in Society, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:teinso:v:87:y:2026:i:c:s0160791x2600182x
    DOI: 10.1016/j.techsoc.2026.103393
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