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How Does Digital Trade Affect a Firm’s Green Total Factor Productivity? A Life Cycle Perspective

Author

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  • Jianbo Hu

    (School of Economics, Guizhou University of Finance and Economics, Guiyang 550025, China)

  • Wenxin Cai

    (School of Economics, Guizhou University of Finance and Economics, Guiyang 550025, China)

  • Yu Shen

    (School of Applied Economics, Guizhou University of Finance and Economics, Guiyang 550025, China)

  • Faustino Dinis

    (School of Economics, Guizhou University of Finance and Economics, Guiyang 550025, China)

Abstract

It is increasingly recognized that the twin transitions of digitalization and green transformation are pivotal to achieving sustainable development. This study examines how digital trade affects corporate green total factor productivity (GTFP), using panel data from Chinese A-share listed firms and 287 prefecture-level cities in Mainland China from 2012 to 2022. The results demonstrate that digital trade exerts a significant positive impact on GTFP, primarily through improvements in technical efficiency, with heterogeneous effects across different stages of the corporate life cycle. Endogeneity concerns are carefully addressed through instrumental variable estimation and quasi-experimental designs, and robustness checks confirm the reliability of the findings. Mechanism analyses further reveal that digital trade enhances GTFP by stimulating green technological innovation and optimizing supply chain management. Importantly, threshold regression reveals non-linear effects. Both the level of digital trade and institutional factors, such as environmental regulation, intellectual property protection, and market integration, moderate the relationship between digital trade and GTFP in U-shaped, N-shaped, and other positive non-linear patterns. These insights enhance the understanding of how digitalization interacts with institutional contexts to drive sustainable productivity growth, providing practical implications for policymakers seeking to optimize digital trade strategies and complementary regulatory frameworks.

Suggested Citation

  • Jianbo Hu & Wenxin Cai & Yu Shen & Faustino Dinis, 2025. "How Does Digital Trade Affect a Firm’s Green Total Factor Productivity? A Life Cycle Perspective," Sustainability, MDPI, vol. 17(14), pages 1-27, July.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:14:p:6435-:d:1701217
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