Digitization, perception of policy uncertainty, and corporate green innovation: A study from China

Abstract

A green economic transformation requires innovation in related technologies. The impact of digitalization on corporate green innovation must be investigated in the context of increasing policy uncertainty; therefore, this study uses data from listed manufacturing enterprises in China from 2011 to 2020, constructs a digitization and policy uncertainty perception index based on text analysis, and investigates corporate green technology innovation in light of digitization and policy uncertainty perception. The results indicate that digitization substantially and positively affects corporate green technology innovation, which raises its performance. An array of robustness tests, including instrumental variable methods, supports the conclusion that digitization enables green innovation. A Heterogeneity analysis also indicates that digitization has a pronounced impact on green technology innovation in large, capital-intensive, and state-owned enterprises. Frequent policy adjustment engenders an upsurge in policy uncertainty, which impedes corporate green technology innovation; however, digitization can play a vital role in alleviating the negative impacts of economic policy uncertainty, thereby accelerating the development of corporate green technologies. This article provides empirical evidence on achieving green and sustainable development in the digital era, making a valuable contribution to the existing literature.