Digitalisation, Organisational Innovation and Firms' Environmental Protection Expenditures: Evidence From Spanish Manufacturing

Abstract

This paper investigates how digitalisation and organisational innovation shape firms' routine environmental protection efforts in Spanish manufacturing. Using an unbalanced panel of 2348 firms and 7603 firm‐year observations from 2009–2023 drawn from the Survey on Business Strategies (ESEE), the study examines the determinants of current environmental protection expenditures as a recurrent form of operational green capability rather than radical eco‐innovation. The empirical analysis relies on panel‐data logit models that relate firm characteristics at time (2009–2022) to current environmental protection expenditures at time (2010–2023), with firm‐level controls and sector and period effects, and reports average marginal effects. The results show that digitalisation is strongly and consistently associated with routine environmental protection efforts. Firms that use robotics in production, invest in external ICT training and implement software‐based process innovations exhibit around 8–11 percentage points higher predicted probabilities of undertaking current environmental protection expenditures than otherwise similar firms. Organisational innovation, measured through the introduction of new work‐organisation practices, also displays a positive and significant association, with an average marginal effect of about 8–9 percentage points. Participation in EU research programmes is likewise positively associated with environmental protection expenditures, although this result applies to a relatively small share of firms and should be interpreted with caution, as it likely reflects the behaviour of a self‐selected subset of highly capable, outward‐oriented firms. The findings indicate that digital and organisational capabilities, together with cooperative engagements, act as key enablers of operational green practices, even though interaction terms provide only weak evidence of strong complementarities in this specific outcome. The paper contributes novel firm‐level evidence on how the twin green–digital transition materialises in ongoing environmental management within a manufacturing sector dominated by SMEs in Spain, shifting attention from one‐off eco‐innovations towards the stabilisation of everyday environmental routines and highlighting the role of capability bundles in supporting sustained environmental protection efforts.