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Firm-Level Digitalization for Sustainability Performance: Evidence from Ningbo City of China

Author

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  • Xuemei Shao

    (College of International Economics & Trade, Ningbo University of Finance and Economics, Ningbo 315175, China)

  • Munir Ahmad

    (College of International Economics & Trade, Ningbo University of Finance and Economics, Ningbo 315175, China
    “Belt and Road” Bulk Commodity Research Center, Ningbo University of Finance and Economics, Ningbo 315175, China)

  • Fahad Javed

    (School of Finance & Economics, Jiangsu University, Zhenjiang 212013, China)

Abstract

Climate change is a significant and urgent threat, gaining traction in the scientific community around the globe and requiring immediate action across many sectors. In this context, the digital economy could provide a mutually beneficial solution by utilizing innovation and technical breakthroughs to establish a sustainable future that addresses environmental deterioration, promotes economic growth, and encourages energy conservation. Against this background, this study examined the diffusion of innovation modeling-based factors affecting small and medium-sized firms’ (SMFs) adoption of the Internet of Things (IoT) technology and its impact on SMFs’ sustainability performance related to environmental, economic, innovation, and energy conservation perspectives. The key findings revealed that (i) the relative advantage, trialability, and observability drive IoT adoption. However, compatibility and complexity hinder IoT adoption. (ii) When prioritizing the adoption factors, the relative benefit is the strongest driver, and compatibility is the most significant barrier to IoT adoption. (iii) IoT technology adopter SMFs spent less on natural resources and more on renewable energy and environmental monitoring systems than non-adopter firms, boosting their environmental sustainability. (iv) IoT technology adopter firms had greater revenue, profits, and credit access than non-adopters and lower input costs, improving their economic sustainability. (v) IoT adopter firms spent more on innovative products than non-adopter enterprises, demonstrating innovation performance. (vi) Compared to non-adopter firms, IoT technology adopter SMFs had lower utility expenses and spent more on energy-efficient technologies. (vii) To realize the full potential of the IoT for a more sustainable and inventive future, authorities may pursue a variety of policy actions involving the strengthening and implementation of IoT technology standards and regulations, securing the incentivization of financial resources to SMFs, diverting the allocation of resources to research and development avenues, prioritizing the capacity development and environmental awareness, and focusing on IoT infrastructure development.

Suggested Citation

  • Xuemei Shao & Munir Ahmad & Fahad Javed, 2024. "Firm-Level Digitalization for Sustainability Performance: Evidence from Ningbo City of China," Sustainability, MDPI, vol. 16(20), pages 1-35, October.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:20:p:8881-:d:1498114
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