Digital transformation and the spillover of green innovation: evidence from peer firms in heavily polluting industries

Xudong Pei, Juan Song, Na Li and Borui Cao

European Journal of Innovation Management, 2025, vol. 28, issue 9, 4257-4283

Abstract: PurposeIt is found that previous studies only focus on how digital transformation contributes to individual firms’ green innovation performance while ignoring the important role that it plays in the spillover and diffusion of green innovations among peer firms. Therefore, this study aims to investigate the influence of focal firms’ digital transformation on the spillover of green innovation among peer firms in heavily polluting industries mediated by environmental, social and governance (ESG) performance and agency conflict. Further, this study is also expected to explore the effects of digital transformation’s green innovation spillover.Design/methodology/approachThis study chooses 6,438 A-share heavily polluting listed firms in the stock exchanges based in Shanghai and Shenzhen in China during 2010–2020 as samples and tests the hypothesis with ordinary least squares (OLS) regression. Results prove to be robust to a battery of robustness analyses the authors performed to take care of endogeneity.FindingsThe results show that the focal firm’s digital transformation may trigger their peer firms’ green innovation spillover and prompt them to engage in green innovation activities actively. The mechanism test shows that peer firms’ ESG performance and agency conflict mediate the influence path between digital transformation and peer firms’ green innovation spillover. Finally, among heavily polluting firms with high industry competition and large scale, digital transformation’s green innovation spillover effects are more significant in conventional energy-based source control, end-of-pipe treatment and substantive green innovation.Originality/valueThis study is possible to provide a potential driving mechanism of green innovation spillovers. The findings lay a sound foundation for future research, providing important theoretical support and practical insights for digital transformation to empower heavily polluting industries to achieve green transformation and low-carbon development.

Keywords: Digital transformation; Green innovation spillover; ESG performance; Agency conflict (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ejimpp:ejim-04-2024-0477

DOI: 10.1108/EJIM-04-2024-0477

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