How digital transformation facilitate synergy for pollution and carbon reduction: Evidence from China

Frontier studies have neglected the impact of digital transformation (DT) on the synergy for pollution and carbon reduction (SPCR) from the perspective of micro enterprises. This paper explores the SPCR effect of DT, as well as its mechanism at micro-firm level. The study found that: (1) DT significantly facilitates corporate SPCR. For every 10% increase in the level of DT, the ranking of SPCR will rise by about 2.3 places. This effect is more obvious in high-tech firms and non-heavy polluters, firms in the eastern region in China, and non-SOE. (2) DT creates innovation-driven and structure-optimizing effects, which enhance the corporate green innovation ability, optimize the business structure and capital allocation structure of enterprises, and then drive the SPCR. (3) External public environmental concerns (PEC) and internal corporate ESG governance act as "accelerators" promoting the SPCR effect of DT. Based on these, policy implications are made to accelerate the pace of corporate DT, give full play to the first-mover advantage, and break the "pollution (carbon) lock-in" with a view to providing theoretical references for the listed enterprises' digitalized governance of SPCR, as well as the governmental departments' formulation of relevant guiding policies, and striving to achieve the high-quality development goal.