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How Digital Transformation Enables Corporate Sustainability: Based on the Internal and External Efficiency Improvement Perspective

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  • Yang Li

    (School of Economics and Management, Xinjiang University, Urumqi 830046, China)

  • Tianye Zhao

    (Information Center, Xinjiang Institute of Engineering, Urumqi 830023, China)

Abstract

The promotion of the simultaneous advancement of digitalization and sustainability has emerged as a crucial concern for achieving high-quality economic growth within the framework of the ‘dual-carbon’ objective. Based on the micro data of Chinese A-share listed companies between 2009 and 2022, this paper systematically examines how digital transformation affects the ESG performance of enterprises in order to explore the effective path for digitalization to promote the sustainable development of enterprises. The results indicate that implementing digital transformation can enhance the ESG performance of enterprises, which in turn boosts their capacity for sustainable development. The test of the mechanism indicates that enhancing internal total factor productivity and optimizing external financial allocation efficiency are the key strategies for driving ESG performance improvement in companies through digital transformation. Further analysis reveals that the improvement effect of digital transformation on corporate ESG performance is more prominent in state-owned enterprises, non-heavily polluted industries, central and western, and low-marketization regions. In addition, while digital transformation enhances the ESG performance of enterprises themselves, it also creates beneficial ripple effects on the ESG metrics of their suppliers and customers, ultimately boosting the sustainable growth of the entire supply chain. The conclusions of this paper help to deepen the potential value of digital transformation and provide policy and practical insights for achieving sustainable economic development.

Suggested Citation

  • Yang Li & Tianye Zhao, 2024. "How Digital Transformation Enables Corporate Sustainability: Based on the Internal and External Efficiency Improvement Perspective," Sustainability, MDPI, vol. 16(12), pages 1-20, June.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:12:p:5037-:d:1414009
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