Can IT Investment Improve Corporate ESG Performance? Evidence from Technological Spillover Effects

Whether corporate digital spending can produce sustainability-related outcomes is still not well understood. Much of the existing discussion treats digital transformation as a broad strategic process, but firms make sustainability decisions through more concrete resource allocations, including investment in information systems, data infrastructure, and IT-based management tools. This study therefore focuses on IT investment and examines its relationship with corporate environmental, social, and governance (ESG) performance. Based on panel data for Chinese A-share listed firms from 2009 to 2024, we estimate fixed-effects models and further test the roles of technological spillovers, market competition, and ownership structure. The evidence indicates that firms with higher IT investment tend to report better ESG performance. This association remains significant when lagged IT investment is used, suggesting that the result is not merely driven by same-period correlation. Technological spillovers explain part of the relationship: IT investment appears to support ESG performance partly by improving technological learning, innovation diffusion, and knowledge accumulation. By contrast, market competition does not significantly change the IT investment–ESG relationship. Additional analysis shows that the positive effect is stronger in state-owned enterprises than in non-state-owned enterprises. The findings imply that IT investment can be viewed not only as a source of operational efficiency, but also as a digital resource that may strengthen firms’ capacity for sustainable governance.