Digital Transformation and Environmental pillar of ESG-based Performance under Financing Constraints: The Mediating Role of Green Innovation in Chinese Listed Firms

This study builds upon existing work that links digital transformation (DT), financing constraints (FC), green innovation (GI), and firms’ environmental pillar of ESG-based performance (SP(E)), and further examines whether DT supports SP(E) through GI under FC. Based on dynamic capabilities theory (DCT) and resource-based view (RBV), we analyse 4456 Chinese A-share-listed firms during the period of 2020–2024. Two-way fixed-effects regression models are adopted as the main empirical approach, while generalized method of moments (GMM) estimations, two-stage instrumental variable (IV-2SLS) estimation, and additional robustness tests are conducted to address potential endogeneity, measurement concerns, and sensitivity issues. The results highlight that DT positively affects SP(E), and GI mediates this relationship. Particularly, the findings do not yield statistically significant evidence that FC moderate the DT–SP(E) linkage in our sample and model setting, which does not rule out the potential moderating effect of FC in other contexts. This study contributes to digital sustainability and FC research by jointly examining whether GI mediates the association between firm-level DT and the SP(E) while simultaneously testing FC as a potential boundary condition in a panel of Chinese listed firms.