Does Digital Technologies Deployment Promote Environmental Performance? Evidence From China

Abstract

In the face of escalating environmental challenges and growing regulatory and stakeholder pressures, improving firms’ environmental performance has become an essential strategic objective. Digital technologies (DTs) are increasingly viewed as transformative tools that can support firms in achieving sustainability goals. However, despite growing interest, existing empirical evidence on the impact of DTs deployment on environmental performance remains fragmented and inconclusive. Moreover, limited empirical research has examined how DTs interact with human-centered production systems, such as lean management, to shape environmental outcomes. Addressing these gaps, this study draws on the natural-resource-based view to investigate whether and how DTs deployment enhances firms’ environmental performance, and how this relationship is moderated by lean production and environmental leadership. Using longitudinal data from publicly listed firms in China, our analysis reveals that DTs deployment has a significant positive effect on environmental performance, and this effect is amplified in firms exhibiting higher levels of lean production and environmental leadership. These findings remain robust across various estimation strategies, including alternative variable specifications, instrumental variable methods, Heckman two-step correction, and a quasi-natural experiment. By providing large-scale empirical evidence on the environmental implications of digital transformation and its interaction with lean practices, this study contributes to the emerging literature on Industry 4.0 and sustainable operations, offering actionable insights for managers and policymakers committed to green transition.