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Enterprise's R&D and Innovation Management

The Impact of Digital Transformation on Enterprises' Green  Innovation

— Micro Transmission Mechanisms and Government Fiscal  Interventions 

Dong Xu, Wang Xiaoxiao

(School of Economics, Zhengzhou University of Aeronautics, Zhengzhou 450046, China)

Abstract: Green innovation is of utmost importance in facilitating the worldwide green trans⁃ formation, as it offers triple benefits in terms of economic expansion, environmental management  and social welfare. The extent to which enterprises transition to green innovation has a direct  role in shaping the green transformation of the development mode as the most important emitters  and innovators. Currently, the wave of digital development is sweeping across the world, pro⁃ foundly reshaping the world pattern. Promoting green innovation in enterprises through digital  transformation is an imperative strategy for adapting to the global development trend and achiev⁃ ing green and sustainable development. In the process of digital transformation, enterprises are  often reluctant and afraid to transform due to the high cost of transformation and long pain pe⁃ riod. Meanwhile, due to the multiple positive externalities of green innovation, enterprises often  encounter the problem of "free-riding" when engaging in green innovation activities. In this con⁃ text, appropriate government intervention would help to alleviate the market dilemma faced by  enterprises in digital transformation and green innovation. Drawing from the aforementioned context, we theoretically analyze the microscopic trans⁃ mission mechanisms through which digital transformation influences enterprises' green innova tion, and discuss the intervention effect of two policy means of tax incentives and fiscal subsi ⁃ ⁃ dies on the relationship between the two, and then provide empirical evidence using a sample of   the panel data of Chinese A-share listed companies in Shanghai and Shenzhen from 2011 to  2021 for the examination of the green innovation effect of enterprises' digital transformation and  its mechanism. It is found that digital transformation has a significant driving effect on enter⁃ prises' green innovation, and this result still holds after a series of endogeneity treatments and ro⁃ bustness tests. The examination of mechanisms indicates that enterprises' digital transformation  facilitates green innovation through the reduction of information asymmetry, mitigation of finan⁃ cial constraints, and enhancement of governance structures. And the tax incentives implemented by government play a crucial role in enhancing the influence of digital transformation in driving  green innovation within enterprises, while fiscal subsidies do not significantly intervene in  whether enterprises' digital transformation exerted green innovation effects. Meanwhile, the  green innovation effects of enterprises' digital transformation are heterogeneous depending on  the type of innovation patents, production factor dependence, ownership structure, degree of in⁃ dustry competitiveness and geographic distribution. This paper seeks to offer new contributions beyond what is currently available in the litera⁃ ture. First, we explore the micro-transmission mechanisms of green innovation resulting from en⁃ terprises' digital transformation. Specifically, we examine the information effect, investment ef⁃ fect, and governance effect, providing a novel perspective for investigating the causal relation⁃ ship between the two. Second, we incorporate tax incentives and fiscal subsidies into the theoreti⁃ cal framework of the impact of enterprises' digital transformation on green innovation, and exam⁃ ine the intervention effect of policy measures on the two. Our work contributes to expanding the  academic research of the impact of government actions on enterprises' digital transformation and  green innovation and improving the understanding of how digital transformation impacts enter⁃ prises' green innovation by enhancing comprehensiveness and depth. 

Key words: digital transformation; green innovation; listed companies