Does digital transformation promote the green transformation of regional manufacturing industry? Evidence from China

This paper uses panel data on Chinese manufacturing listed companies from 2011 to 2021 and measures enterprise digital transformation by the ratio of digital transformation-related word frequency to the total word count in annual reports. It systematically explores the impact of enterprise digital transformation on the green transformation gap between the Eastern and Western manufacturing industries and its mechanism. Further, it extends the analysis to the linkage effect of enterprise digital transformation on narrowing the green transformation gap between the Eastern and Western manufacturing industries and promoting common prosperity from a macro perspective. The study found that enterprise digital transformation can narrow the green transformation gap between the eastern and western manufacturing industries. Mechanism analysis shows that enterprise digital transformation narrows the green transformation gap between the Eastern and Western manufacturing industries by easing financing constraints, enhancing internal control of enterprises, and improving corporate ESG performance. Further analysis shows that enterprise digital transformation has a positive linkage effect on narrowing the green transformation gap between China’s eastern and western manufacturing industries and promoting common prosperity.