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Study on the impact of digital transformation on green competitive advantage: The role of green innovation and government regulation

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  • Shaoling Wu
  • Peng Cheng
  • Fan Yang

Abstract

Digital transformation enables small and medium enterprises (SMEs) to reduce or overcome their reliance on resources and energy, thereby minimizing their environmental impact and providing them with sustainable green competitive advantages. However, the reasons for this phenomenon are not yet clear. To further investigate this issue, we selected 391 Chinese SMEs to examine the relationships among green transformation, green innovation, government regulation, and green competitive advantages. Green innovation includes green product innovation and green process innovation, while government regulation includes incentive regulation, constraint regulation, and guidance regulation. The empirical results show that digital transformation can enhance SMEs’ green competitive advantages. Additionally, the hypothesized mediating effect of green product innovation and green process innovation between digital transformation and green competitive advantages is supported, while the moderating effect of incentive regulation, constraint regulation, and guidance regulation on the relationship between digital transformation and green product innovation and green process innovation is also confirmed. The findings of this study may contribute to more effective management of digital transformation and green innovation in SMEs, thereby promoting their development.

Suggested Citation

  • Shaoling Wu & Peng Cheng & Fan Yang, 2024. "Study on the impact of digital transformation on green competitive advantage: The role of green innovation and government regulation," PLOS ONE, Public Library of Science, vol. 19(8), pages 1-25, August.
    • Handle: RePEc:plo:pone00:0306603
    DOI: 10.1371/journal.pone.0306603
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    2. Andriyansah, Andriyansah & Saputra, Nika, 2025. "Product Values in the Digital Era and the Quest for Sustainable Competitive Advantage: A Bibliometric Mapping of Trends," International Review of Management and Marketing, International Review of Management and Marketing, vol. 15(6), pages 252-268, October.
    3. Ruojun, Qi, 2026. "From Green Dynamic Capabilities to Competitive Advantage: A Dynamic Capabilities Perspective on Sustainability Innovation," International Review of Management and Marketing, International Review of Management and Marketing, vol. 16(3), pages 395-405, March.
    4. Jianqiang Li & Hongming Liu & Xingqiang Zheng & Wenjie Liu & Huan Wang, 2025. "The Impact of Environmental Regulation and Cognition of Manure Treatment on the Resource Utilization Behaviors of Swine Farmers," Agriculture, MDPI, vol. 15(20), pages 1-18, October.
    5. Rendi Febrianda & Luthfina Ariyani & Wati Hermawati & Erman Aminullah & Anggini Dinaseviani, 2025. "Model of Entrepreneurship and Digital Technology in Responding to Green and Non‐Green Innovation: Case Study of Batik SMEs in Indonesia," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5904-5918, August.
    6. Lu, Di & Miao, Xiaoming & Wang, Yi, 2026. "Breakthrough innovation, digital transformation, and firms' long-term competitiveness," Finance Research Letters, Elsevier, vol. 88(C).

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