Institutional Investors Heterogeneity and Green Innovation in China: Does Digital Transformation Matter?

Abstract

This paper examines how different categories of institutional investors influence green innovation for Chinese-listed companies and investigates the impact of digital transformation on this relationship. The results suggest that institutional investors characterized as pressure-insensitive significantly improve corporate green innovation, while pressure-sensitive institutions exhibit no effect on green innovation. We further analyse whether digital transformation affects the relationship between institutional ownership heterogeneity and green innovation. Consistent with the view that digital transformation can promote the timely dissemination of information and alleviate information asymmetry, the findings demonstrate that both types of institutional investors promote green innovation for firms with higher levels of digital transformation. Further analyses reveal that digital transformation at the city level amplifies the influence of institutional investors on green innovation, and the underlying technology architecture provides more value to the institutional ownership heterogeneity−green innovation nexus.

Keywords: institutional heterogeneity, Green innovation, digital transformation