Transformation in Growth: The Moderating Effect of Sustainable Growth Rates on Digital-Driven Green Innovation

In today’s society characterized by the rapid expansion of the digital economy, enterprises are under pressure to use digital innovation for green development, which is mainly reflected in China’s current “dual carbon” challenges. Using a sample of 1678 firm-year observations of China’s A-share listed companies between 2007-2023, this paper explores the impact mechanism of digital transformation on green innovation, and the moderating role of corporate sustainable growth. The empirical results found strong evidence that digital transformation has a direct and significantly positive impact on green innovation. The sustainable growth rate interacts positively with digital transformation, leading to larger improvements in green innovation performance. To accurately measure the digital transformation of firms in this paper, both the proportion of digital-related intangible assets and entropy-method composite index are used. Several robustness tests support the reliability of our main findings. The analysis of heterogeneity shows that larger firms and publicly-owned enterprises play more significant roles than others. This paper contributes to the understanding of how enterprises achieve low-carbon transitions by clarifying the mechanistic linkage of digital transformation and green innovation, thus providing a micro-level foundation for relevant policy support.