Corporate digital transformation, market competition, and the environmental performance—Microevidence from Chinese manufacturing

Abstract

AbstractIn recent years, as China's economy has grown at a rapid pace and social welfare has increased dramatically, environmental issues have become increasingly prominent. Whether companies undertaking digital transformation will improve the environmental performance has drawn the focus of scholars. For this reason, this paper uses the microfirm data of China's manufacturing industry from 2011 to 2020 to explore the relationship between corporate digital transformation (CDT), market competition, and environmental performance, as well as its external mechanism. The study has found that in the analysis of environmental performance measured by firms' pollution emissions, the improvement of the level of CDT shows a nonlinear trajectory in its impact on environmental performance. With a highly centralized market environment, the impact of CDT on environmental performance is further diminished. By analyzing the variability of the degree of market competition, the CDT can promote the environmental performance by enhancing market competition (reducing market concentration). In addition, from the perspective of source reduction, the CDT also advances the environmental performance. The research conclusions contribute to the study of environmental performance, which can guide the transformation from end‐of‐pipe pollutant emissions to source reduction to promote the sustainable development of enterprises.