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The green innovation effect of the digital economy

Author

Listed:
  • Chen, Keren
  • Zhao, Shenghan
  • Jiang, Gaozhe
  • He, Yafeng
  • Li, Hui

Abstract

While the digital economy promises significant advancements, its role in driving corporate environmental sustainability, particularly green innovation, remains underexplored. This study investigates how the digital economy affects green innovation in Chinese listed companies from 2010 to 2022. Constructing a comprehensive digital economy index, we find that it significantly promotes green innovation, an effect mediated by reduced agency costs and improved financial leverage. Moreover, a firm's digitalization level amplifies this positive relationship. Notably, the effect is more pronounced in non-high-polluting industries and non-state-owned enterprises. These findings underscore the potential of the digital economy to foster green innovation, offering valuable insights for policymakers and businesses seeking to integrate digital technologies for a sustainable future.

Suggested Citation

  • Chen, Keren & Zhao, Shenghan & Jiang, Gaozhe & He, Yafeng & Li, Hui, 2025. "The green innovation effect of the digital economy," International Review of Economics & Finance, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025001339
    DOI: 10.1016/j.iref.2025.103970
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    More about this item

    Keywords

    Digital economy; Green innovation; Agency costs; Financial leverage; Digitalization; China;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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