Digitalization and firms’ innovation efficiency: Do corporate social responsibility and irresponsibility matter?

Xi Zhong () and Ge Ren ()
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Xi Zhong: Guangdong University of Technology, Tianhe District
Ge Ren: South China University of Technology

The Journal of Technology Transfer, 2025, vol. 50, issue 3, No 4, 856-888

Abstract: Abstract High innovation efficiency is regarded as an important starting point for enhancing the competitive advantage of enterprises and encouraging them to achieve sustainable development. However, to date, how digitalization affects firms’ innovation efficiency is still unclear. We integrate absorptive capacity and stakeholder theory to argue that in the short term, digitalization undermines firms’ absorptive capacity, thereby reducing their innovation efficiency. Second, we propose that corporate social responsibility (CSR) (including internal and external CSR) weakens the negative impact of digitalization on firms’ innovation efficiency by mitigating its destructive effect on their absorptive capacity. In contrast, corporate social irresponsibility (CSiR) (including internal and external CSiR) enhances the negative impact of digitalization on firms’ innovation efficiency by increasing the destructive effect of digitalization on their absorptive capacity. Finally, we argue that internal CSR plays a stronger buffering role than does external CSR. In contrast, internal CSiR plays a stronger enhancing role than does external CSiR. Based on the fixed effects model, we obtain empirical evidence to support most of our theoretical views from our empirical tests of 212 Chinese pharmaceutical listed companies. This research brings new insights into a more nuanced understanding of the impact of digitalization on firms’ innovation.

Keywords: Digitalization; Innovation efficiency; Corporate social responsibility; Corporate social irresponsibility; Absorptive capacity (search for similar items in EconPapers)
JEL-codes: D24 L25 M11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10961-024-10075-9

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