IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i5p1794-d1595708.html
   My bibliography  Save this article

Business Environment Optimization, Digital Transformation, and Enterprises’ Green Innovation

Author

Listed:
  • Jun Dai

    (School of Management, Wuhan University of Science and Technology, Wuhan 430081, China)

  • Qianyuan Xiao

    (School of Management, Wuhan University of Science and Technology, Wuhan 430081, China)

Abstract

The optimization of the business environment makes regional economic development more dynamic. Whether this can be used as an influencing factor to promote the green innovation of enterprises is worthy of attention. Based on the concept of digitalization and green collaborative transformation, combined with the panel data of A-share listed companies in China’s capital market from 2016 to 2020 and the corresponding business environment index of each province, this paper empirically tests the impact of business environment optimization on enterprises’ green innovation and its channel mechanism by using a two-way fixed-utility model. The findings are as follows: Firstly, business environment optimization has a significant positive impact on enterprises’ green innovations, and this conclusion is still valid after a series of endogenous and robustness tests. Secondly, business environment optimization can foster conditions conductive to green innovation by promoting enterprises’ digital transformation. Through empirical tests, a chain-channel mechanism is identified whereby business environments can promote enterprises’ green innovation via digital transformation, innovation ability, and a willingness to pursue environmental management. Finally, further analysis reveals significant heterogeneity in the positive impact of business environment optimization on green innovation, with a more pronounced positive impact in state-owned enterprises, high-tech enterprises, and low-polluting enterprises. The research findings of this paper provide a specific reference and basis for the Chinese government to further optimize the business environment and effectively promote the green innovation of enterprises.

Suggested Citation

  • Jun Dai & Qianyuan Xiao, 2025. "Business Environment Optimization, Digital Transformation, and Enterprises’ Green Innovation," Sustainability, MDPI, vol. 17(5), pages 1-22, February.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:5:p:1794-:d:1595708
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/5/1794/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/5/1794/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Du, Kerui & Cheng, Yuanyuan & Yao, Xin, 2021. "Environmental regulation, green technology innovation, and industrial structure upgrading: The road to the green transformation of Chinese cities," Energy Economics, Elsevier, vol. 98(C).
    2. Hossam A. Gabbar & A. Ramadan, 2025. "Integrated Renewable Energy Systems for Buildings: An Assessment of the Environmental and Socio-Economic Sustainability," Sustainability, MDPI, vol. 17(2), pages 1-39, January.
    3. Xu, Chao & Sun, Guanglin & Kong, Tao, 2024. "The impact of digital transformation on enterprise green innovation," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 1-12.
    4. Yu, Linhui & Tang, Xuepeng & Huang, Xianhai, 2023. "Does the business environment promote entrepreneurship?——Evidence from the China Household Finance Survey," China Economic Review, Elsevier, vol. 79(C).
    5. Yu, Zhen & Shen, Yiran & Jiang, Shengjun, 2022. "The effects of corporate governance uncertainty on state-owned enterprises' green innovation in China: Perspective from the participation of non-state-owned shareholders," Energy Economics, Elsevier, vol. 115(C).
    6. Irfan, Muhammad & Razzaq, Asif & Sharif, Arshian & Yang, Xiaodong, 2022. "Influence mechanism between green finance and green innovation: Exploring regional policy intervention effects in China," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    7. Elhassan Enbaia & Ahmad Alzubi & Kolawole Iyiola & Hasan Yousef Aljuhmani, 2024. "The Interplay Between Environmental Ethics and Sustainable Performance: Does Organizational Green Culture and Green Innovation Really Matter?," Sustainability, MDPI, vol. 16(23), pages 1-24, November.
    8. Tang, Maogang & Liu, Yinlin & Hu, Fengxia & Wu, Baijun, 2023. "Effect of digital transformation on enterprises' green innovation: Empirical evidence from listed companies in China," Energy Economics, Elsevier, vol. 128(C).
    9. Hu, Guoqiang & Wang, Xiaoqi & Wang, Yu, 2021. "Can the green credit policy stimulate green innovation in heavily polluting enterprises? Evidence from a quasi-natural experiment in China," Energy Economics, Elsevier, vol. 98(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cui, Xiaona & Mohd Said, Ridzwana & Abdul Rahim, Norhuda & Ni, Mengjiao, 2024. "Can green finance Lead to green investment? Evidence from heavily polluting industries," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    2. Tao, Miaomiao & Wang, Jianda & Wu, Sihong & Wang, Guanghao, 2024. "Can climate-related information disclosures strengthen green innovation capacity? Firm-level evidence using textual analysis," International Review of Economics & Finance, Elsevier, vol. 95(C).
    3. Hu, Hui & Qi, Shaozhou & Chen, Yuanzhi, 2023. "Using green technology for a better tomorrow: How enterprises and government utilize the carbon trading system and incentive policies," China Economic Review, Elsevier, vol. 78(C).
    4. Qi, Xiulin & Wu, Zhifang & Xu, Jinqing & Shan, Biaoan, 2023. "Environmental justice and green innovation: A quasi-natural experiment based on the establishment of environmental courts in China," Ecological Economics, Elsevier, vol. 205(C).
    5. Ge, Shilong & Luo, Xiaodan & Li, Yuangang & Zheng, Lanxing, 2024. "The impact of green credit policy on total factor productivity of enterprises," International Review of Economics & Finance, Elsevier, vol. 95(C).
    6. Li, Longda, 2024. "The environmental spillovers of buyers' digital transformation: Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 209(C).
    7. Qianyi Du & Haoran Pan & Shuang Liang & Xiaoxue Liu, 2023. "Can Green Credit Policies Accelerate the Realization of the Dual Carbon Goal in China? Examination Based on an Endogenous Financial CGE Model," IJERPH, MDPI, vol. 20(5), pages 1-26, March.
    8. Xiaohui Zhan & Xinrong Lian & Shengli Dai, 2025. "Correcting or Concealing? The Impact of Digital Transformation on the Greenwashing Behavior of Heavily Polluting Enterprises," Sustainability, MDPI, vol. 17(1), pages 1-21, January.
    9. Zhao, Ziyi & Zhao, Yuhuan & Lv, Xin & Li, Xiaoping & Zheng, Lu & Fan, Shunan & Zuo, Sumin, 2024. "Environmental regulation and green innovation: Does state ownership matter?," Energy Economics, Elsevier, vol. 136(C).
    10. Song, Yang & Pang, Xiaoqian & Zhang, Zhiyuan & Sahut, Jean-Michel, 2024. "Can the new energy demonstration city policy promote corporate green innovation capability?," Energy Economics, Elsevier, vol. 136(C).
    11. Chen, Wen, 2023. "Bank connections, corporate social responsibility and low-carbon innovation," Energy Policy, Elsevier, vol. 183(C).
    12. Li, Hemei & Liu, Zhenya & Hachard, Virginie, 2024. "Digital transformation driving green innovation: Evidence from Chinese A-Share firms," International Review of Economics & Finance, Elsevier, vol. 95(C).
    13. Hongying Zhang & Liyang Wan & Qiaozhe Guo & Song Nie, 2025. "The Effects of the Sci-Tech Finance Policy on Urban Green Technology Innovation: Evidence from 283 Cities in China," Sustainability, MDPI, vol. 17(5), pages 1-24, February.
    14. Wang, Xin & Ma, Chaoqun & Yao, Zheng, 2024. "The double-edged sword effect of digital capability on green innovation: Evidence from Chinese listed industrial firms," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 321-339.
    15. Xiaoling Zhang & Zhangming Shan & Xuerong Wang & Decai Tang, 2023. "The Impact of Green Finance on Upgrading the Manufacturing Industry of the Yangtze River Economic Belt Based on the Spatial Econometric Model," Sustainability, MDPI, vol. 15(12), pages 1-17, June.
    16. Feiguo Quan & Liu Liu, 2025. "How Does Fiscal Vertical Imbalance Affect Regional Green Technology Innovation in China—The Moderating Role of Financial Decentralization and Fiscal Transparency," Sustainability, MDPI, vol. 17(5), pages 1-21, February.
    17. Ge, Tao & Hao, Zixuan & Chen, Yuan & Chen, Zhanbo, 2024. "Energy intensity constraints and corporate investment strategies: Evidence from Chinese listed enterprises," Finance Research Letters, Elsevier, vol. 64(C).
    18. Zhang, Yongji & Lan, Minghui & Zhao, Yapu & Su, Zhi & Hao, Yu & Du, Heran, 2024. "Regional carbon emission pressure and corporate green innovation," Applied Energy, Elsevier, vol. 360(C).
    19. Zhang, Huiming & Wan, Dayu & Sun, Chuanwang & Wu, Kai & Lin, Caixia, 2023. "Does political inspection promote corporate green innovation?," Energy Economics, Elsevier, vol. 123(C).
    20. Ren, Xiaohang & Li, Wenqi & Li, Yiying, 2024. "Climate risk, digital transformation and corporate green innovation efficiency: Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 209(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:17:y:2025:i:5:p:1794-:d:1595708. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.