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Can Corporate Digitalization Promote Green Innovation? The Moderating Roles of Internal Control and Institutional Ownership

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  • Dukangqi Li

    (Department of Business Management, School of Management, Xiamen University, Xiamen 361005, China)

  • Weitao Shen

    (Department of Business Management, School of Management, Xiamen University, Xiamen 361005, China)

Abstract

This study examined the impact of corporate digitalization on green innovation using data concerning A-share companies listed on the Shanghai and Shenzhen stock markets from 2012 to 2018. We measured the degree of corporate digitalization through a text analysis of annual reports and empirically tested its impact on green innovation using a panel data fixed effects model. We found that digital transformation can improve green innovation levels, especially when internal control is weak and institutional ownership is low. These findings support the theoretical expectation that digitalization can strengthen supervision. The relationship between digitization and corporate governance mechanisms was proved to be complementary. Additionally, the analysis of economic consequences showed that digitalization improves financial performance by promoting green innovation. The results clarify the determinants of corporate green innovation and provide relevant insights for increasing the value of corporate digital transformation.

Suggested Citation

  • Dukangqi Li & Weitao Shen, 2021. "Can Corporate Digitalization Promote Green Innovation? The Moderating Roles of Internal Control and Institutional Ownership," Sustainability, MDPI, vol. 13(24), pages 1-22, December.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:24:p:13983-:d:705243
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    References listed on IDEAS

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    1. Carrión-Flores, Carmen E. & Innes, Robert, 2010. "Environmental innovation and environmental performance," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 27-42, January.
    2. Abdul Karim Feroz & Hangjung Zo & Ananth Chiravuri, 2021. "Digital Transformation and Environmental Sustainability: A Review and Research Agenda," Sustainability, MDPI, vol. 13(3), pages 1-20, February.
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