There is a debate about how digitalization affects corporate environmental strategic decisions. Different from previous studies, this study aims to explore the nonlinear impact of digital transformation on corporate environmental responsibility (CER) and the moderating roles of the institutions.
A sample of 3,862 Chinese public firms from 2010 to 2020 is used to test the hypotheses through fixed effects panel regression models.
The study finds an inverted U-shaped relationship between digital transformation and CER. Moderate digital transformation positively promote CER, but the impact turns negative when there is excessive digital transformation. Notably, this negative impact does not apply to situations in the institutional environment. Specifically, formal institutions (environmental regulation) and informal institutions (relational networks) strengthen the positive association between digital transformation and CER.
This research provides valuable insights for digitally transformed firms on implementing ethical environmental practices and enriches understanding of environmental ethics in developing countries with imperfect institutions.
This study draws on the resource-based view to clarify the contradictory findings about how digitalization affects corporate environmental strategic decisions, expanding the scope of research on corporate environmental ethical behavior. Integrating the dual institutional lens, this study deepens the conditions for environmental ethical behavior to occur in the context of digitalization from a comprehensive perspective of formal and informal institutions.
