Digital Ripples in Industries: An Institutional Theory Perspective on How Peer Transformation Dismantles Greenwashing Behavior

Abstract

This study examines if peers’ digital transformation affects focal firms’ greenwashing, addressing the literature gap of insufficient focus on industry interactions via institutional theory. Using a sample of Chinese listed companies, the paper conducts an empirical analysis and finds that the digital transformation of peer enterprises significantly inhibits the greenwashing behavior of focal enterprises. This inhibitory effect is realized through three key mechanisms: the competitive peer spillover effect of digital transformation, the suppression of peer spillover in greenwashing behavior, and the convergence effect of industry-wide information disclosure quality. Moreover, this inhibitory effect is particularly pronounced in industries characterized by low short-termism tendencies, high technology intensity, high pollution levels, and fierce competition. Further research confirms that the initial emergence of highly digitalized enterprises in an industry triggers a “catfish effect,” and once the proportion of digitalized enterprises exceeds 50%, the inhibitory effect on greenwashing behavior becomes significantly stronger.