Relationships between Digital Transformation and Corporate Sustainability: The Case of China

Jie Zhang, Olga P. Nedospasova

National Research Tomsk State University, Tomsk, Russia

Abstract

Businesses and governments alike must explore extra sustainability reserves, including those associated with digital transformation, in the current VUCA (volatility, uncertainty, complexity and ambiguity) world. The purpose of the article is to identify the relationship between digital transformation and corporate sustainability and to justify investor attention as a moderating factor in this relationship. To achieve this goal, the authors formulated and tested two hypotheses: (1) digital transformation has a positive impact on corporate sustainability; (2) investor attention is a moderating factor in the relationship between digital transformation and corporate sustainability. The regression analysis uses data on China's listed companies from 2013 to 2022 (5,367 observations). The authors found a significant positive relationship between digital transformation and corporate sustainability. It is empirically proven that digital transformation contributes to corporate sustainability. This conclusion remains sound after a succession of robust tests have been carried out. The study confirmed that investor attention plays a significant moderating role in the relationship between digital transformation and corporate sustainability. The heterogeneity test showed that the impact of digital transformation on corporate sustainability is, firstly, more pronounced for state-owned enterprises in China, and secondly, it is more noticeable in the regions of China with a more developed institutional environment. The theoretical significance of this study is to confirm the value of introducing the moderating variable of “investor attention” between digital transformation and corporate sustainability, expanding the traditional framework for studying the impact of digital transformation on corporate sustainability. The practical significance is to provide more evidence that the adoption of digital technologies by firms facilitates the sustainable development of their businesses. The study is also of great value to governments, as it justifies the relevance of institutional change for successful digitization and sustainable development.

Keywords

digital transformation; accounting information quality; corporate sustainability; regression analysis; investor attention; digital technologies

JEL classification

References

1. Liu, S., Yan, J., Zhang, S., Lin, H. (2021). Can corporate digital transformation promote input-output efficiency? Journal of Management World, Vol. 37, No. 5, 170–190. https://doi.org/10.19744/j.cnki.11-1235/f.2021.0072

            2. Wu, L., Lou, B., Hitt, L. (2019). Data analytics supports decentralized innovation. Management Science, Vol. 65, No. 10, 4863–4877. https://doi.org/10.1287/mnsc.2019.3344

            3. Einav, L, Levin, J. (2014). Economics in the age of big data. Science, Vol. 346, No. 6210, 715–721. https://doi.org/10.1126/science.1243089

            4. Tan, Y., Zhu, Z., Li, M. (2024). Digital transformation enables high-quality development of manufacturing enterprises: From the dual perspectives of economic benefits and ESG performance. Journal of Jiangxi University of Finance and Economics, No. 4, 45–58. https://doi.org/10.13676/j.cnki.cn36-1224/f.2024.04.002

            5. Zhang, S., Liu, X., Yin, W. (2022). Research on the impact of green development concept on sustainable operating ability. Shandong Social Sciences, No. 12, 148–155. https://doi.org/10.14112/j.cnki.37-1053/c.2022.12.025

            6. Zhao, C., Wang, W. (2021). How does digital transformation affect the total factor productivity of enterprises? Finance & Trade Economics, Vol. 42, No. 7, 114–129. https://doi.org/10.19795/j.cnki.cn11-1166/f.20210705.001

            7. Wang, J., Liu, Z., Liu, X. (2024). Digital transformation and enterprise total factor productivity: A mechanism test based on resource allocation efficiency. Science & Technology Progress and Policy, Vol. 41, No. 3, 23–33. https://doi.org/10.6049/kjjbydc.2022100126

            8. Zhong, T., Huang, Y., Sun, F. (2022). Enterprise digital transformation, market competition and comparability of accounting information. Modern Finance and Economics – Journal of Tianjin University of Finance and Economics, Vol. 42, No. 12, 21–43. https://doi.org/10.19559/j.cnki.12-1387.2022.12.002

            9. Zhang, Y., Bu, J. (2023). Does enterprise digital transformation affect accounting information comparability. Journal of Zhongnan University of Economics and Law, No. 2, 41–51. https://doi.org/10.19639/j.cnki.issn1003-5230.20230131.001

            10. Zhang, C., Chai, B., Mirza, S.S., Jin, Y. (2024). Customer-driven value creation in the digital economy: Determining the role of customer firms’ digital transformation on supplier performance in China. Omega, Vol. 128, 103132. https://doi.org/10.1016/j.omega.2024.103132

            11. Wu, F., Hu, H., Lin, H., Ren, X. (2021). Enterprise digital transformation and capital market performance: Empirical evidence from stock liquidity. Journal of Management World, Vol. 37, No. 7, 130–144. https://doi.org/10.19744/j.cnki.11-1235/f.2021.0097

            12. Zhao, X., Cai, L. (2023). Digital transformation and corporate ESG: Evidence from China. Finance Research Letters, Vol. 58, Part A, 104310. https://doi.org/10.1016/j.frl.2023.104310

            13. Chen, L., Chen, Y., Gao, Y. (2024). Digital transformation and ESG performance: A quasinatural experiment based on China’s environmental protection law. International Journal of Energy Research, Vol. 2024, Issue 1, 8895846. https://doi.org/10.1155/2024/8895846

            14. Qi, Y., Xiao, X. (2020). Transformation of enterprise management in the era of digital economy. Journal of Management World, Vol. 36, No. 6, 135–152. https://doi.org/10.19744/j.cnki.11-1235/f.2020.0091

            15. Gao, H., Zhou, M. (2024). How digital transformation enhances enterprise resilience – Based on dynamic capability theory and enterprise technology application scenario. Scientific Management Research, Vol. 42, No. 3, 53–65. https://doi.org/10.19445/j.cnki.15-1103/g3.2024.03.007

            16. Liang, D. (2023). Research on the countermeasures of digital transformation of China’s manufacturing industry under the background of digital economy. Modern Industrial Economy and Informatization, Vol. 13, No. 9, 25–29. https://doi.org/10.16525/j.cnki.14-1362/n.2023.09.007

            17. Zhang, H., Zou, Y., Gao, Z. (2024). Influence of digital transformation on total factor productivity of enterprises – From the perspective of industry chain correlation. Statistics & Decision, Vol. 40, No. 13, 165–170. https://doi.org/10.13546/j.cnki.tjyjc.2024.13.029

            18. Zeng, J., Yang, J., Huang, X. (2023). Exploring the mechanism of manufacturing enterprises’ vertical disintegration affecting enterprise innovation: An empirical test based on the moderating effect of digital transformation. Journal of Central University of Finance & Economics, No. 9, 95–105. https://doi.org/10.19681/j.cnki.jcufe.2023.09.007

            19. Xu, J., Zhu, G., Song, J. (2021). COVID-19 impact, digital transformation and corporate performance — Based on an empirical analysis of China’s A-share listed companies from 2007 to 2021. Finance & Economics of Xinjiang, No. 2, 5–15. https://doi.org/10.16716/j.cnki.65-1030/f.2024.02.001

            20. Jian, G., Feng, H. (2024). The logic and practice of digital high-end enabling the green development of the manufacturing industry: Exploratory case study on the multiple heterogeneity of the yellow river basin. Journal of Management, Vol. 37, No. 3, 43–59. https://doi.org/10.19808/j.cnki.41-1408/F.2024.0023

            21. Alexopoulos, I., Kounetas, K., Tzelepis, D. (2018). Environmental and financial performance. Is there a win-win or a win-loss situation? Evidence from the Greek manufacturing. Journal of Cleaner Production, Vol. 197, Part 1, 1275–1283. https://doi.org/10.1016/j.jclepro.2018.06.302

            22. Xi, L., Zhao, H. (2022). Senior executive dual environmental cognition, green innovation and enterprise sustainable development performance. Business and Management Journal, Vol. 44, No. 3, 139–158. https://doi.org/10.19616/j.cnki.bmj.2022.03.009

            23. Sun, J., Zhang, J. (2023). Review on the relationship between green input and enterprise performance. Academic Journal of Business & Management, Vol. 5, Issue 16, 138–143. https://doi.org/10.25236/AJBM.2023.051619

            24. Shan, C., Zhou, W., Geng, Z. (2024). Environmental regulation, green technology innovation and sustainable development: An analysis of moderated mediating effect. On Economic Problems, No. 8, 95–102. https://doi.org/10.16011/j.cnki.jjwt.2024.08.002

            25. Zhang, W., Xi, B. (2024). The effect of carbon emission trading on enterprises’ sustainable development performance: A quasi-natural experiment based on carbon emission trading pilot in China. Energy Policy, Vol. 185, 113960. https://doi.org/10.1016/j.enpol.2023.113960

            26. Tian, S., Zhang, H., Xu, G. (2024). The effect of green credit on enterprises’ green transformation under sustainable development: Evidence from green innovation in high-pollution enterprises in China. Sustainability, Vol. 16, Issue 1, 235. https://doi.org/10.3390/su16010235

            27. Liu, B., Chen, M., Guan, W., Li, C. (2024). Information governance effects of digital transformation: Evidence from information disclosure quality of A-share listed companies. Journal of Central University of Finance & Economics, No. 4, 52–65. https://doi.org/10.19681/j.cnki.jcufe.2024.04.001

            28. Han, L., Jing, X. (2024). Investor concerns, ESG information disclosure and corporate green technology innovation. On Economic Problems, No. 6, 115–122. https://doi.org/10.16011/j.cnki.jjwt.2024.06.002

            29. Gao, Y., Yang, H., Sun, X., Tian, X., Xu, J. (2024). Corporate digital transformation and financing constraints: The moderating effect of institutional investors. Heliyon, Vol. 10, Issue 12, e33199. https://doi.org/10.1016/j.heliyon.2024.e33199

            30. Ma, H., Hou, G. (2023). Digital economy, local government behavior and financialization of real enterprises. Commercial Research, No. 4, 115–122. https://doi.org/10.13902/j.cnki.syyj.2023.04.009

            31. Gao, X., Xu, W., Li, D., Xing, L. (2021). Media coverage and investment efficiency. Journal of Empirical Finance, Vol. 63, 270–293. https://doi.org/10.1016/j.jempfin.2021.07.002

            32. Chen, X., Liu, H. (2023). Does investor attention affect corporate ESG performance: Evidence from internet search. Journal of Zhongnan University of Economics and Law, No. 2, 15–27. https://doi.org/10.19639/j.cnki.issn1003-5230.20230130.005

            33. Guo, J., Li, C., Jiao, W. (2024). Corporate social responsibility disclosure and market value: The mediating role of investor attention. Finance Research Letters, Vol. 67, Part A, 105863. https://doi.org/10.1016/j.frl.2024.105863

            34. Liu, X., Zhang, S., Gao, Y. (2023). Research on the impact of corporate financialization on fortune creativity in the real economy – Empirical evidence from non-financial listed companies. The World of Survey and Research, No. 5, 24–33. https://doi.org/10.13778/j.cnki.11-3705/c.2023.05.003

            35. Xia, J., Zhang, Y. (2024). Restructuring the institutional environment for integration of digital and real economies: Logic and path. Academic Forum, Vol. 47, No. 3, 77–88. https://doi.org/10.16524/j.45-1002.2024.03.009

            36. Ying, Y., Jin, S. (2023). Digital transformation and corporate sustainability: The moderating effect of ambidextrous innovation. Systems, Vol. 11, Issue 7, 344. https://doi.org/10.3390/systems11070344

            37. Shang, Y., Raza, S.A., Huo, Z., Shahzad, U., Zhao, X. (2023). Does enterprise digital transformation contribute to the carbon emission reduction? Micro-level evidence from China. International Review of Economics & Finance, Vol. 86, 1–13. https://doi.org/10.1016/j.iref.2023.02.019

About Authors

Jie Zhang

Post-Graduate Student, Department of Strategic Management and Marketing, National Research Tomsk State University, Tomsk, Russia (634050, Tomsk, Lenin Avenue, 36); ORCID https://orcid.org/0009-0004-9507-7322 e-mail: zhang.2021@inbox.ru

Olga Pavlovna Nedospasova

Doctor of Economic Sciences, Associate Professor, Head of the Department of Organizational Behavior and Personnel Management, National Research Tomsk State University, Tomsk, Russia (634050, Tomsk, Lenin Avenue, 36); ORCID https://orcid.org/0000-0001-8272-4616 e-mail: olgaeconomy@mail.ru

For citation

Zhang, J., Nedospasova, O.A. (2024). Relationships between Digital Transformation and Corporate Sustainability: The Case of China. Journal of Applied Economic Research, Vol. 23, No. 4, 1099-1123. https://doi.org/10.15826/vestnik.2024.23.4.043

Article info

Received September 7, 2024; Revised October 5, 2024; Accepted October 19, 2024.

DOI: https://doi.org/10.15826/vestnik.2024.23.4.043

Download full text article: