Artificial intelligence adoption and corporate green innovation capability

Kai Zhong and Liangrong Song

Finance Research Letters, 2025, vol. 72, issue C

Abstract: The necessity of addressing climate change has promoted green innovation in corporate and policy agendas, while artificial intelligence (AI) has transformed business operations across sectors. This study examined the impact of AI adoption on green innovation capability in Chinese-listed companies. We focused on the mediating roles of financing constraints and agency costs. The findings indicate a significant positive relationship between AI adoption and green innovation capability by analyzing 30,572 firm–year observations from 2010 to 2022 through a two-way fixed-effects model, mediation analysis, and heterogeneity tests. Reduced financing constraints and agency costs partially mediated the relationship. Heterogeneity analysis reveals that AI adoption's impact was strongest for firms in growth stages and non-state-owned enterprises. These findings elucidate how technological advancements drive sustainable corporate practices contingent upon organizational life cycles and ownership structures.

Keywords: Artificial intelligence; Green innovation; Financing constraint; Agency cost; Corporate sustainability (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015095

DOI: 10.1016/j.frl.2024.106480

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