Role of Digital Transformation on Carbon Performance: Evidence from Firm-Level Analysis in China

Abstract

The continuous proliferation of the global digital wave has increased the contribution of firms’ digital transformation as a vital force propelling economic growth and sustainable development, highlighting the importance of digital transformation and the environment. However, only limited studies focused on how digital transformation influences carbon performance. To fill in this gap, this study investigates the impact of digital transformation on corporate carbon performance using a sample of 2286 Chinese A-share listed firms from 2008 to 2020 and employs the ordinary least squares (OLS) model as the principal research methodology. According to the results, the adoption of digital transformation strategies by firms exhibits a notable capacity to enhance carbon performance, which holds after a series of robustness tests. Green technology innovation and total factor productivity exhibit a partially mediating influence on the relationship between digital transformation and carbon performance. Further analyses reveal that enhanced green management practices and government subsidies have the potential to further amplify this positive effect. However, the impact is diminished by financing constraints and political connections. The findings of this research hold significance for firms striving for sustainable development within the era.