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

Jun Dai (daijun78@wust.edu.cn) and Qianyuan Xiao
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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

Sustainability, 2025, vol. 17, issue 5, 1-22

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.

Keywords: business environment; enterprises’ green innovation; digital transformation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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