Digital technology application and corporate green innovation: digital financial inclusion as an institutional turning point in China

Digital transformation is widely expected to support corporate green innovation, yet existing studies offer limited insight into when and under what conditions digitalization reshapes firms’ innovation behavior. Using panel data from Chinese A-share listed manufacturing firms during 2014–2023, this study examines whether digital financial inclusion conditions the relationship between digital technology application and green innovation. A panel threshold regression approach is used to identify whether changes in the institutional financial environment alter firms’ innovation decision-making logic. The results show that digital technology application is positively associated with green innovation, but this effect exhibits a clear threshold pattern. When digital financial inclusion remains below a critical level, the effect is limited. Once the threshold is crossed, the effect increases substantially, indicating a shift from resource substitution to strategic complementarity. Further analysis shows that green invention innovation responds to digitalization only at higher levels of digital financial inclusion, whereas utility-model green innovation benefits at lower levels. The threshold effect is more pronounced for non-state-owned enterprises, pollution-intensive firms, firms with limited internal cash flow and firms operating in less competitive markets. These findings demonstrate that the impact of digital technology application on green innovation depends on institutional financial maturity rather than following a uniform pattern.