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Green development and the digital economy are receiving increasing attention among scholars, practitioners, and policy makers, as the link between the two remains unclear, and exploring the study of the mechanisms at play between the two to achieve quality economic development is an urgent issue to be addressed. This study addresses this gap and aims to provide clarity by analyzing examples of business practices in developing countries. Using a total of 20,283 datasets from 2049 listed manufacturing firms from China from 2007 to 2020 as the study sample, the mechanism of digital transformation’s impact on firms’ green technological innovation capability is empirically examined and the mediating role of firms’ green dynamic capabilities is verified. This study finds that: (1) Digital transformation significantly enhances the level of green technology innovation of enterprises. (2) There is a partial mediating effect of green dynamic capabilities in the process of digital transformation positively affecting enterprises’ green technology innovation. (3) Digital transformation by state-owned, central and western regions and by medium-sized enterprises is more significantly effective in promoting green technology innovation than non-state-owned, eastern regions and small and large enterprises. (4) The analysis of economic consequences shows that digital transformation can mitigate the incremental costs incurred in the process of digital transformation by empowering enterprises to achieve green development and cost reduction through green technology innovation.
Zhang et al. (Mon,) studied this question.