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The digitalization of business processes has increasingly challenged conventional wisdom in corporate green innovation. This empirical paper studies the timely but theoretically underexplored relationship between digital transformation and green innovation in a developing country context. Given that firms’ digital transformation shifts organizational structures toward decentralization, we employ a digital perspective to analyze organizational coordination, control, and learning mechanisms and propose that digital transformation positively affects corporate green innovation. Moreover, drawing on structural contingency theory, we demonstrate that such effects can be strengthened by external contingencies, specifically regulatory pressure and international opportunities. Using a dataset of Chinese listed firms, we find empirical support for our hypotheses. Our study is one of the first to examine how firms can leverage organizational digital transformation to enhance their green innovation performance and thus provides new insights into the drivers of sustainable practices for firms in developing countries.
Green innovation has been proven to be a crucial factor in achieving economic profitability and environmental sustainability [1, 2, 3]. Given the fragile institutional environment and heterogeneous firm capabilities, environmental scholars call for a uniform paradigm that addresses both firms’ structural change and green innovation [4, 5]. Related literature has long been dominated by the resource-based view and institutional theory [6, 7, 8], but the lack of reference to organizational design seems more challenging when discussing green innovation in a digital context [5, 9]. Hence, our study incorporates organizational changes (i.e., firms’ digital transformation) and external contingencies (i.e., regulatory pressure and international opportunities) to bridge structural contingency theory and the digital perspective in the framework of firms’ green innovation.
In the last decade, the burgeoning digital economy and its related digital tools have phenomenally spurred organizations into an accelerated digital transformation, which has triggered frequent organizational change and, hence, innovation [10, 11]. Therefore, digital transformation is viewed as organizational change in strategy, structure, supply chains, and marketing enabled by firms’ widespread use of digital technologies, aiming at constructing a new digital business model that contributes to the creation and appropriation of greater value [12, 13]. It is naturally connected to the topic of innovation. As a type of innovation that concerns environmental issues, green innovation refers to the incorporation of novel green technologies into production to mitigate negative impacts on the environment and improve the productive use of energy [3, 14]. Most extant studies have focused on the direct effects of firm capabilities and knowledge on green innovation [15, 16, 17], whereas little research has covered how organizational transformation shapes corporate green innovation. There is a consensus that digital transformation is a vital conduit for organizational decentralization and management efficiency enhancement [12, 18, 19, 20], and that it fundamentally promotes diversified innovation, as postulated in structural contingency theory [21, 22]. Therefore, our study tracks the logic and proposes that a firm’s digital transformation will significantly facilitate its green innovation.
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Recognizing the classic contingency theory, which holds that organizations have a proper “fit” with environmental challenges and opportunities [23], we suggest that some external contingency factors should be investigated. Our purpose is to figure out the market conditions under which corporate green innovation is more or less sound as affected by digital transformation. As previous researchers and practitioners reveal, environmental regulations can be more challenging in some developing and emerging economies [4, 24]. In China, administrative policies to achieve greening goals vary by province, rendering firms less or more engaged in organizational changes that impact green innovation. This condition provides us with a chance to observe sub-national differences in environmental regulations and innovation feedback. At the supranational level, firms born in developing economies are tempted by the gains from global markets, and thus commit more to meeting environmental standards in focal countries. We expect that the effect of digital transformation is promoted when (1) firms are challenged by higher-level regulatory pressure, because organic organizational structures are increasingly required to handle the resulting task interdependence; and (2) firms perceive remunerative international opportunities, because seeing high task uncertainty evokes more efficient digital infrastructure and architecture in green innovation.
We tested our theoretical arguments on a sample of 2010 Chinese-listed firms during the 2012–2019 period and the results largely support our hypotheses. Our study makes three contributions to the literature. First, by taking a digital perspective on firms’ green innovation, our study refines the traditional non-digital setting for green innovation in the digital era. Our findings confirm that digitalization strategies accelerate firms’ adoption of greener and cleaner operations in a developing country context. Second, we creatively employ the contingency paradigm to explain how external contingencies influence organizational changes through digitalization. Exploring the task interdependence and uncertainty stemming from external challenges and opportunities, we enrich the theoretical analyses on the moderating roles of external contingencies in the discussion of corporate green innovation. Third, we elaborate on the impact of internationalization on green innovation for emerging market firms wishing to benefit from serving more foreign customers. Our study provides interesting insights by building a compound view of digital internationalization and global–local environmental responses.
With high regard for business and social sustainability, green innovation embodies firms’ response to structural, regulatory, and supranational challenges [15, 25]. Numerous studies have examined firm characteristics such as knowledge-based capabilities [8, 26], principal–agent arrangement [15, 27], and financial interests [24, 28], as well as institutional pressure imposed by stakeholders, including political pressure from governmental institutions [6, 29], societal pressure from non-governmental organizations [30], and market pressure from supply chains [31], competitors [32], and customers [33]. Nevertheless, little is known about organizational infrastructure for efficient technology exploitation in green innovation, especially in the digital era.
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Embedded in a context of digital internationalization, more complexity may be involved in the process of new knowledge creation and diffusion to improve the efficiency and efficacy of green innovation [5, 34]. What previous literature has not examined is how digital technologies reshape firms’ organizational and skill infrastructure to advance their environmental management, and what factors influence firms’ efficient adoption of digital tools for the sake of sustainable innovation. In this study, we examine the impact of digital transformation on green innovation by employing the framework of structural contingency theory. We clarify how organizations adjust to achieve greening goals through technology, in response to the moderating effects of external contingencies such as pressure and opportunities [35]. Our central argument is that digital transformation helps firms exploit green technologies more efficiently. Thus, excellence in exploiting internal organizational changes allows avoidance of environmental uncertainties [36]. This provides us with an interesting perspective to scrutinize the Chinese context, which is full of challenges and opportunities. Given that “the model of choice is never satisfied in fact and that deviations from the model accommodate the problems of introducing change” [37] (p. 72), and following the contingency paradigm of Battilana and Casciaro [38], we identify the external contingencies that influence the organizational status quo, namely, regulatory pressure from sub-national government and international opportunities from trading across foreign markets. These factors can positively moderate the relationship between internal structural contingencies (i.e., digital transformation) and corporate green innovation. We capture three general propositions considering the determinant of organizational structure: the degree of firms’ digital transformation; the task interdependence proposition (e.g., regulatory pressure); and the task uncertainty proposition (e.g., international opportunities) in our proposed conceptual model (see Figure 1).
Driven by the assertion that “digital skills carry a general-purpose character which is important in the face of the sustainability transition that entails the creation of new activities as well as the adaptation of existing ones” [5] (p. 13), we uncover the key function of digital transformation in firms’ implementation of their environmental sustainability strategy and in defining the proper fit of organizational structure for green innovation. According to [39], digital globalization enables a growing body of modern firms to benefit from digital infrastructure and zero marginal costs. Meanwhile, digital technologies pave the way for firms to execute effective coordination and internal control and thereby embrace diversified knowledge, leading to continuous organizational changes and innovation [10, 19]. Hence, we clarify
Embedded in a context of digital internationalization, more complexity may be involved in the process of new knowledge creation and diffusion to improve the efficiency and efficacy of green innovation [5, 34]. What previous literature has not examined is how digital technologies reshape firms’ organizational and skill infrastructure to advance their environmental management, and what factors influence firms’ efficient adoption of digital tools for the sake of sustainable innovation. In this study, we examine the impact of digital transformation on green innovation by employing the framework of structural contingency theory. We clarify how organizations adjust to achieve greening goals through technology, in response to the moderating effects of external contingencies such as pressure and opportunities [35]. Our central argument is that digital transformation helps firms exploit green technologies more efficiently. Thus, excellence in exploiting internal organizational changes allows avoidance of environmental uncertainties [36]. This provides us with an interesting perspective to scrutinize the Chinese context, which is full of challenges and opportunities. Given that “the model of choice is never satisfied in fact and that deviations from the model accommodate the problems of introducing change” [37] (p. 72), and following the contingency paradigm of Battilana and Casciaro [38], we identify the external contingencies that influence the organizational status quo, namely, regulatory pressure from sub-national government and international opportunities from trading across foreign markets. These factors can positively moderate the relationship between internal structural contingencies (i.e., digital transformation) and corporate green innovation. We capture three general propositions considering the determinant of organizational structure: the degree of firms’ digital transformation; the task interdependence proposition (e.g., regulatory pressure); and the task uncertainty proposition (e.g., international opportunities) in our proposed conceptual model (see Figure 1).
Driven by the assertion that “digital skills carry a general-purpose character which is important in the face of the sustainability transition that entails the creation of new activities as well as the adaptation of existing ones” [5] (p. 13), we uncover the key function of digital transformation in firms’ implementation of their environmental sustainability strategy and in defining the proper fit of organizational structure for green innovation. According to [39], digital globalization enables a growing body of modern firms to benefit from digital infrastructure and zero marginal costs. Meanwhile, digital technologies pave the way for firms to execute effective coordination and internal control and thereby embrace diversified knowledge, leading to continuous organizational changes and innovation [10, 19]. Hence, we clarify
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