This study examines how digital transformation impacts total factor productivity (TFP) in Chinese coal enterprises through technological innovation. Using panel data from A-share listed coal companies (2012-2022), we find that digital transformation significantly enhances TFP by fostering innovation in decision making, production techniques, and business models. We uncover a nuanced relationship between government subsidies and innovation: moderate subsidies amplify digital transformation's positive effects, while excessive subsidies may crowd out independent innovation. Managerial short-termism can impede technological advancement and diminish digitalisation benefits. Heterogeneity analysis shows digitalisation's positive impacts are more pronounced in central regions and state-owned enterprises. This research contributes to the discourse on industrial policy, technological change, and sustainable development in carbon-intensive industries. It offers insights for policymakers navigating energy transition, emphasising the importance of balanced government support, long-term managerial vision, and targeted digital strategies in fostering innovation and productivity growth. Received: February 4, 2025; Accepted: July 2, 2025
Lei et al. (Thu,) studied this question.