Digital Capability and Radical Green Innovation: The Role of Organizational Resilience and Environmental Dynamism

ABSTRACT Despite recognition of the increasing importance of digital capability, whether and how it affects radical green innovation is still unclear. This study explores how digital capability influences radical green innovation via two types of organizational resilience, as well as the moderating role of environmental dynamism, according to information‐processing theory and dynamic capabilities theory. Using data collected from 326 manufacturing firms in China, this study employs hierarchical regression analysis and bootstrap analysis to test the research hypotheses. The results show that digital capability not only has an inverted U‐shaped relationship with radical green innovation, but also has an inverted U‐shaped relationship with precursor resilience and improvisation resilience. Furthermore, both precursor resilience and improvisation resilience partially mediate the relationship between digital capability and radical green innovation. Meanwhile, environmental dynamism plays a significant moderating role between precursor resilience and radical green innovation as well as improvisation resilience and radical green innovation, and moderates the mediating effect of precursor resilience and improvisation resilience. This research reveals the nonlinear relationships of digital capability, organizational resilience, and radical green innovation and furthermore provides implications for firms and governments.