How does digital transformation affect firms' ESG performance? The evidence from China

Area of Science:

• Business and Management
• Information Systems
• Corporate Social Responsibility

Background:

• The impact of digital transformation on Environmental, Social, and Governance (ESG) performance is not well understood.
• Existing research lacks a clear theoretical mechanism and exploration of boundary conditions.
• This study addresses the gap by examining the digital transformation-ESG performance nexus.

Purpose of the Study:

• To investigate the relationship between digital transformation and firms' ESG performance.
• To identify the mediating role of corporate resilience.
• To examine the moderating effects of top management team (TMT) R&D background and managerial myopia.

Main Methods:

• Empirical analysis using a sample of Chinese A-share listed firms from 2012 to 2022.
• Statistical modeling to test the proposed relationships.
• Examination of mediation and moderation effects.

Main Results:

• Digital transformation demonstrates a significant positive effect on ESG performance.
• Corporate resilience acts as a key mediator, explaining how digital transformation improves ESG outcomes.
• TMT's R&D background positively moderates the relationship, while managerial myopia negatively moderates it.

Conclusions:

• Digital transformation is a crucial driver for enhancing corporate ESG performance.
• Improving corporate resilience is a key mechanism through which digital transformation impacts ESG.
• Strategic considerations regarding TMT expertise and myopia are vital for maximizing digital transformation's ESG benefits.