Has digital transformation improved corporate ESG performance?

Has digital transformation improved corporate ESG performance? | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article Has digital transformation improved corporate ESG performance? Meng Liu, Linxin Guo, Tingqiang Chen This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7644701/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Departing from literature on digital innovation drivers by examining the theoretical reasoning and important mechanisms of how digital transformation affects corporate ESG performance from three perspectives: technological innovation, labor substitution and creation, and management efficiency. Analyzing panel data from 1,531 Chinese listed companies from 2012 to 2023, we find that digital transformation significantly enhances overall ESG scores, primarily driven by economies of scale. This improvement manifests primarily through accelerated growth in E and S scores, while the G scores decreased linearly. Heterogeneity analysis indicates that digital transformation most substantially accelerates ESG performance in technology-intensive companies, has a transitional effect on the performance of central region companies in central regions, has a linear promotional effect on the ESG performance of labor-intensive companies and in western regions, and significantly accelerates the ESG performance of capital-intensive and eastern regions' companies. E-scores are raised by digital transformation, especially in low-pollution companies. S-score acceleration is greater for technology-driven companies than for labor-driven companies, and state-owned companies exhibit larger G-score declines than non-state-owned companies. Moreover, the dynamic and phased characteristics of digital transformation on corporate ESG performance were further validated by threshold regression analysis and mechanism testing. These methods confirmed the profit conditions necessary for digital transformation to influence ESG and independent dimension scores, the U-shaped mechanism of corporate labor income share decreasing and then increasing, the accelerated green technological innovation, and reduced corporate management expense efficiency due to resistance to change and digital transformation costs. Earth and environmental sciences/Environmental sciences Earth and environmental sciences/Environmental social sciences Digital transformation ESG Technological innovation Labor share Management efficiency Full Text Additional Declarations No competing interests reported. Supplementary Files Appendix.docx Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7644701","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Article","associatedPublications":[],"authors":[{"id":534907087,"identity":"ab0bf93b-97e1-48ca-b1c3-8efe493395f0","order_by":0,"name":"Meng Liu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA7UlEQVRIiWNgGAWjYBACNvnDxz8k/rOp55c/fPBBQkUNYS18EmxpDB/Y0hIkZ7AlGzw4c4ywFjkJHjPGGWyHEgxu8JhJPmxhJsJh0m1pj3l4DuQx3O4xq0hsYGPgb+9OwK9F5vBxYx6JO8WMc46V3UjcIcMgcebsBvxaGNISpHkMnjE2MyRvu5F4ho3BQCKXkJYcA2mehMOMbQwJZgWJbcxEaJHIMZOcceBwYo9EihkDcVp4jiUbfGxIM5YAMiQSzhzjIegX+fbmgw8SG2zk7I83H/z4o6JGjr+9F78WDMBDmvJRMApGwSgYBVgBAO+HTRxrIadoAAAAAElFTkSuQmCC","orcid":"","institution":"Nanjing Tech University","correspondingAuthor":true,"prefix":"","firstName":"Meng","middleName":"","lastName":"Liu","suffix":""},{"id":534907088,"identity":"9368eea1-26bd-4c7c-aa5c-9f087a804304","order_by":1,"name":"Linxin Guo","email":"","orcid":"","institution":"Nanjing Tech University","correspondingAuthor":false,"prefix":"","firstName":"Linxin","middleName":"","lastName":"Guo","suffix":""},{"id":534907089,"identity":"d696d141-d175-4842-af08-caf269786d30","order_by":2,"name":"Tingqiang Chen","email":"","orcid":"","institution":"Nanjing Tech University","correspondingAuthor":false,"prefix":"","firstName":"Tingqiang","middleName":"","lastName":"Chen","suffix":""}],"badges":[],"createdAt":"2025-09-18 03:23:23","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-7644701/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7644701/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":94619150,"identity":"56cb0714-b2d5-4f15-991b-6c8b2f8a4a49","added_by":"auto","created_at":"2025-10-29 03:51:18","extension":"docx","order_by":0,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":122564,"visible":true,"origin":"","legend":"","description":"","filename":"HasdigitaltransformationimprovedcorporateESG.docx","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1/812ac91754b173f2d148747b.docx"},{"id":94619171,"identity":"99733dab-5382-4a8b-87a6-b881fdc8299b","added_by":"auto","created_at":"2025-10-29 03:51:21","extension":"json","order_by":1,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":5221,"visible":true,"origin":"","legend":"","description":"","filename":"14c945fbe1e04834b54153329984b131.json","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1/1a5836f554fca0f4a3838410.json"},{"id":94618968,"identity":"e77c7476-3ab6-4371-a92a-175cb5c39e68","added_by":"auto","created_at":"2025-10-29 03:51:06","extension":"docx","order_by":2,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":30524,"visible":true,"origin":"","legend":"","description":"","filename":"Appendix.docx","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1/54beb12d1bcfbce8fd4d1a38.docx"},{"id":94618863,"identity":"6b8d343b-b37b-4013-8cf1-4721e3a944d3","added_by":"auto","created_at":"2025-10-29 03:51:02","extension":"xml","order_by":3,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":223830,"visible":true,"origin":"","legend":"","description":"","filename":"14c945fbe1e04834b54153329984b1311enriched.xml","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1/df5047ec04ffc74f3730fe3a.xml"},{"id":94618977,"identity":"276111fa-fa80-4389-ab0c-77a6c6869d7d","added_by":"auto","created_at":"2025-10-29 03:51:08","extension":"xml","order_by":4,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":220975,"visible":true,"origin":"","legend":"","description":"","filename":"14c945fbe1e04834b54153329984b1311structuring.xml","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1/fe92f3440b88b78151370481.xml"},{"id":94619132,"identity":"a56b26c1-4617-4892-ba8c-883c91cd9333","added_by":"auto","created_at":"2025-10-29 03:51:17","extension":"html","order_by":5,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":232780,"visible":true,"origin":"","legend":"","description":"","filename":"earlyproof.html","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1/c22d651ea9da38acbce0b642.html"},{"id":100428072,"identity":"2e238a99-16fa-4f41-b362-7bc93ab1cb2f","added_by":"auto","created_at":"2026-01-16 14:24:45","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":584167,"visible":true,"origin":"","legend":"","description":"","filename":"HasdigitaltransformationimprovedcorporateESG.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1_covered_59cbbd84-56f0-46a5-a1b0-8e2ca195b34c.pdf"},{"id":94619130,"identity":"cc34b377-9b27-417b-bfaf-b04f19d3b647","added_by":"auto","created_at":"2025-10-29 03:51:17","extension":"docx","order_by":0,"title":"","display":"","copyAsset":false,"role":"supplement","size":30524,"visible":true,"origin":"","legend":"","description":"","filename":"Appendix.docx","url":"https://assets-eu.researchsquare.com/files/rs-7644701/v1/31764839806206760fe8e594.docx"}],"financialInterests":"No competing interests reported.","formattedTitle":"Has digital transformation improved corporate ESG performance?","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Digital transformation, ESG, Technological innovation, Labor share, Management efficiency","lastPublishedDoi":"10.21203/rs.3.rs-7644701/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7644701/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"Departing from literature on digital innovation drivers by examining the theoretical reasoning and important mechanisms of how digital transformation affects corporate ESG performance from three perspectives: technological innovation, labor substitution and creation, and management efficiency. Analyzing panel data from 1,531 Chinese listed companies from 2012 to 2023, we find that digital transformation significantly enhances overall ESG scores, primarily driven by economies of scale. This improvement manifests primarily through accelerated growth in E and S scores, while the G scores decreased linearly. Heterogeneity analysis indicates that digital transformation most substantially accelerates ESG performance in technology-intensive companies, has a transitional effect on the performance of central region companies in central regions, has a linear promotional effect on the ESG performance of labor-intensive companies and in western regions, and significantly accelerates the ESG performance of capital-intensive and eastern regions' companies. E-scores are raised by digital transformation, especially in low-pollution companies. S-score acceleration is greater for technology-driven companies than for labor-driven companies, and state-owned companies exhibit larger G-score declines than non-state-owned companies. Moreover, the dynamic and phased characteristics of digital transformation on corporate ESG performance were further validated by threshold regression analysis and mechanism testing. These methods confirmed the profit conditions necessary for digital transformation to influence ESG and independent dimension scores, the U-shaped mechanism of corporate labor income share decreasing and then increasing, the accelerated green technological innovation, and reduced corporate management expense efficiency due to resistance to change and digital transformation costs.","manuscriptTitle":"Has digital transformation improved corporate ESG performance?","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-10-29 03:45:56","doi":"10.21203/rs.3.rs-7644701/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"1a391f6e-6dbd-4137-be63-4f92823a5a2f","owner":[],"postedDate":"October 29th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[{"id":56871650,"name":"Earth and environmental sciences/Environmental sciences"},{"id":56871651,"name":"Earth and environmental sciences/Environmental social sciences"}],"tags":[],"updatedAt":"2026-01-16T14:24:26+00:00","versionOfRecord":[],"versionCreatedAt":"2025-10-29 03:45:56","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-7644701","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-7644701","identity":"rs-7644701","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}