Does the diffusion of digital technologies promote corporate green innovation? Empirical evidence from China

To explore how the diffusion of digital technologies shapes corporate green innovation, this study uses panel data from A-share listed companies between 2007 and 2021. The empirical findings reveal that digital diffusion significantly enhances the quality, quantity, and efficiency of green innovation. The effects are heterogeneous across firms: in high-tech enterprises, digital diffusion primarily improves innovation quality, while in non-high-tech enterprises, it mainly boosts innovation quantity. Moreover, the positive effects are stronger in heavily polluting industries than in cleaner ones. Mechanism analysis suggests that digital diffusion advances green innovation by strengthening internal corporate capabilities—particularly in production, automation, R&D, and management. These enhanced capabilities lead to more efficient and higher-quality green innovation outcomes. Interestingly, the study uncovers an inverted U-shaped relationship between digital diffusion and the quantity of green innovation, implying that while early-stage diffusion stimulates innovation, its marginal benefits may decline after a certain threshold. This finding offers valuable insights into the stages of technological adoption and their varying impacts. The research provides strategic implications for both policymakers and corporate leaders. For governments, it underscores the need to balance support for digital infrastructure with regulation to avoid diminishing returns. For firms, especially those in high-pollution or low-tech sectors, the study highlights the importance of timing and scale in digital transformation strategies.