Unlocking Sustainable Value: The Dual Pathways from Digital Innovation to Corporate ESG Performance

Yi-Xiang Wang, Wenyuan Lv, Y F

Against the backdrop of the dual convergence of the digital economy and sustainable development strategies, digital innovation has emerged as a pivotal driver for reshaping firms’ competitive advantages and fulfilling social responsibilities. In this study, the analysis draws on a sample of Chinese listed firms from 2014 to 2023. ESG performance is measured with Hua Zheng ESG scores, digital innovation is captured via digital patent identification, and a dual-mediation framework is employed to examine internal organizational and external supply chain mechanisms, along with heterogeneity analysis. The findings indicate that digital innovation exerts a significant positive effect on ESG performance and reveal a unique dual mediating mechanism: within the internal boundary of the firm, digital innovation releases available organizational slack significantly through internal resource orchestration, and this abundant slack provides a necessary resource buffer for ESG investment; within the external network of the firm, digital innovation reduces supplier concentration significantly, thereby enhancing bargaining and supply chain discourse power, which in turn improves corporate ESG performance. Heterogeneity analysis further demonstrates that the promoting effect of digital innovation on ESG performance is more pronounced in subsamples characterized by CEO duality, low technological intensity, and high levels of marketization. By drawing on the resource-based view and resource dependence theory respectively to explain internal and external mediating pathways, this study advances understanding of the complementary mechanisms through which digital innovation enhances ESG performance. It demonstrates how digital innovation comprehensively reshapes firm capabilities, providing valuable insights for formulating strategic ESG initiatives in the digital era.