Sensing and Seizing Opportunities for Green Innovation: The Role of Business Process Digitalization

Abstract

The potential of digitalization in fostering corporate green innovation has been widely recognized, leading many firms to invest heavily in this area. However, the effectiveness of these efforts varies significantly across firms, with many struggling to leverage digitalization to enhance green innovation. To address this paradox, we draw on dynamic capability theory to elucidate the mechanisms through which business process digitalization (BPD) influences green innovation. We also investigate how these effects differ between state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). Analyzing both survey and archival data collected from Chinese manufacturing firms, we find that the positive impact of BPD on green innovation is mediated by both opportunity explication and organizational flexibility. Furthermore, our results indicate that the effects of BPD on opportunity explication and organizational flexibility are less pronounced in SOEs compared to non-SOEs. This study contributes to the literature by offering a deeper and more nuanced understanding of the role of BPD in green innovation, and by demonstrating how the effectiveness of digitalization varies across firm types.