Digital development and innovation for environmental sustainability: The role of government support and government intervention

Abstract

Green innovation plays a crucial role in actualizing environmental sustainability. Although digitalization is acknowledged for its significant contribution to environmental sustainability, existing research has yet to delve deeply into the mechanisms and conditions under which digital development can bolster green innovation. Bridging the resource‐based view and institutional theory, this research examined how digital development impacts green innovation via the offering of financial backing for the proliferation of green technologies, termed as green finance. We also explored the moderating roles of institutional forces, that is, government support and government intervention. We base our analysis on data collated from 30 provinces in China spanning the years from 2012 to 2018 and employ fixed‐effect and random‐effect regression models, alongside a series of robustness tests. Our findings propose that green finance plays a pivotal role in mediating the relationship between digital development and green innovation. We further discerned that while government support amplifies the impact of digital development on green finance, government intervention tends to undermine it. These insights present valuable contributions to the domains of digital development research, institutional theory, and innovation for environmental sustainability and carry practical implications for policymakers striving for environmental sustainability.