Substantive digital innovation or symbolic digital innovation: Which type of digital innovation is more conducive to corporate ESG performance?

The synergistic development of digitization and greening is an inherent demand for the holistic reshaping and upgrading of the global economy. This study explores the pivotal role of heterogeneous digital innovation in improving corporate environment, society, and governance (ESG) performance to investigate the compatibility path between enterprise digitalization and sustainable development. Compared to previous literature, this paper adopts patent data provided by IPC to identify corporate digital technology innovation, evaluating the influence of digital innovation on corporate ESG performance with a specific focus on inherent innovation motivation. Based on a sample of Chinese listed companies from 2012 to 2021, the study reveals a significant enhancement of digital technology innovation in corporate ESG performance, verifying that substantive digital innovation can stimulate higher ESG performance. Digital technology innovation operates mainly by stimulating green innovation and improving information disclosure quality. The Governance pillar benefits the most among each ESG pillar, whereas there is no evidence that symbolic digital innovation can boost the Environment pillar. Furthermore, the study highlights the vital roles played by intellectual property protection and corporate innovation-oriented strategy, which can amplify the positive impacts of digital technology innovation, especially substantive innovation, on ESG performance. Moreover, substantive digital innovation can inhibit corporate greenwashing, while symbolic innovation cannot. These findings contribute to fresh micro-level evidence of the non-economic implications of the digital economy, providing novel insights into the intricate interplay between digital technology innovation and ESG performance through a process-oriented lens, offering cogent policy recommendations to foster increased business engagement in ESG activities.