Weathering the storm: climate risk perception and digital innovation in firms with exposure to the grain sector

Introduction Global climate change has increased the frequency of extreme weather events, making climate risk a salient external shock to firms’ sustainable operations. Firms with exposure to the grain sector, as key actors in the food security system, rely heavily on natural conditions and therefore tend to be more sensitive to climate variability. Methods Using panel data on A-share listed firms in China with exposure to the grain sector from 2016 to 2024, this paper employs a fixed-effects model to examine the effect of climate risk perception on digital innovation in firms with exposure to the grain sector and its underlying channels. Results Climate risk perception has a positive and statistically significant effect on digital innovation among these firms, and the estimates are robust to a range of alternative specifications. Mechanism tests suggest that the effect operates primarily through increased R&D investment and improvements in human capital. Moderation analysis further shows that managerial myopia attenuates, whereas organizational responsiveness strengthens, the positive relationship between climate risk perception and digital innovation in firms with exposure to the grain sector. Discussion These findings offer theoretical and empirical insights for emerging market economies aiming to manage climate risk and enhance food security.