This study aims to explore how digital technologies drive green innovation in manufacturing firms, focusing on the moderating effects of government subsidies and environmental regulations.
Using panel data on Chinese manufacturing firms, this study applies a two-way fixed-effects model to investigate the effect of digital technology on the green innovation of manufacturing firms. Thereafter, the moderating effects of government subsidies and environmental regulations were analysed.
Digital technology was observed to exert a significant negative effect on the green innovation of manufacturing firms during the sample period. Relying solely on government subsidies or environmental regulations cannot alleviate this negative effect effectively. The green innovation of manufacturing firms can be expedited only when synergistic power is formed between digital technology and the two afore-mentioned types of government policies. The above synergistic power, which is better reflected in manufacturing firms in the eastern and western regions, as well as small and medium-sized firms significantly “improved the quality and quantity” of green innovation.
This study attempts to integrate two types of government policies and digital technologies into the same framework and analyses the triple synergistic power of promoting green innovation in manufacturing firms. This has not been adequately addressed by existing literature. The findings reveal that government subsidies and environmental regulations are required for digital technologies to effectively improve green innovation in manufacturing firms, expanding the existing literature.
