Digitize to decarbonize: Digital-real integration provides the green development pathway for corporate operation

Purpose With the acceleration of climate change, economic development is becoming progressively limited by resource and environmental constraints. A green and low-carbon transition can be greatly facilitated by increasing green total factor productivity (GTFP) of enterprises. This paper aims to establish the mechanism between digital–real integration (DRI) and GTFP and provide empirical findings that can inform the development of green development policies. Design/methodology/approach Relying on panel data covering Chinese industrial enterprises, the authors assess the effect of DRI on GTFP and further explore the mechanisms of mediation by means of fixed-effects estimation and mediation analysis. To guarantee the validity of the study’s findings, the authors take into account endogeneity and conduct a series of robustness tests. Findings The results present the evidence that DRI has a significant positive impact on GTFP. According to the results of the mediation, DRI supports the growth of GTFP, in large part due to the fact that it spurs green innovation practices, accelerates digital transformation and relieves financing pressures. Results from the heterogeneity analysis indicate that the positive effect is stronger for state-owned enterprises, firms operating in pollution-intensive and heavy-industry sectors and firms situated in eastern China. The moderating analysis indicates that environmental regulation, when more stringent, reinforces the beneficial effect of DRI on GTFP; by contrast, stronger R&D intensity and green finance reduce the strength of this effect. Originality/value This research methodologically explains the use of DRI to improve GTFP and provides empirical data to shape policies regarding climate change mitigation, green industrial development and carbon reduction.