The green innovation effect of the digital economy

Abstract

While the digital economy promises significant advancements, its role in driving corporate environmental sustainability, particularly green innovation, remains underexplored. This study investigates how the digital economy affects green innovation in Chinese listed companies from 2010 to 2022. Constructing a comprehensive digital economy index, we find that it significantly promotes green innovation, an effect mediated by reduced agency costs and improved financial leverage. Moreover, a firm's digitalization level amplifies this positive relationship. Notably, the effect is more pronounced in non-high-polluting industries and non-state-owned enterprises. These findings underscore the potential of the digital economy to foster green innovation, offering valuable insights for policymakers and businesses seeking to integrate digital technologies for a sustainable future.