How does digitization enable green innovation? Evidence from Chinese listed companies

Abstract The coordinated development of digitization and greening is an essential requirement for the sustainable development of the global economy. With the rapid development of the digital economy, enterprises are facing a new external environment for green innovation. This paper uses the robust principal component analysis method to construct the digital economy development index for Chinese prefecture‐level or above cities from 2012 to 2019 and examines the impact of the digital economy on corporate green innovation. It is found that the development of the digital economy can stimulate corporate green innovation by alleviating financing constraints, improving internal control, and reducing environmental uncertainty. This study further reveals that both increasing government environmental regulation and stronger judicial guarantees can enhance the positive impact of digitization. This research aims to provide inspiration and reference on how better to integrate digital economy development and corporate green innovation.