Does environmental governance matter to the relationship between digital transformation and high-quality development? Evidence from manufacturing sector in China

Environmental governance has emerged as a crucial tactic to support the sustainable development of human civilization in light of the serious environmental issues. Meanwhile, during the process of promoting the high-quality development of China’s economy, digital transformation plays a significant role in improving the total factor productivity of the manufacturing sector. We seek to find out whether urban environmental governance has an impact on micro-enterprises, and therefore, the study selects the data of A-share listed manufacturing companies from 2012 to 2020 to study the effect of digital transformation on the total factor productivity of the manufacturing industry and how the effect of environmental governance affects the relationship between digital transformation and total factor productivity. The results unveil that digital transformation can significantly contribute to the total factor productivity of the manufacturing industry. At the same time, digital transformation can promote the high-quality development of enterprises by promoting the fulfillment of corporate social responsibility. Additionally, it is shown that poor environmental governance will weaken the promoting effect of digital transformation on total factor productivity. Furthermore, in state-owned companies and non-heavy polluting industries, environmental governance has a more significant moderating influence on digital transformation and total factor productivity. This study enriches the literature on urban environmental governance and micro-enterprise development, and they support the notion that, from the standpoints of environmental protection and economic development, the level of environmental governance should be continuously optimized and the development of ecological civilization should be strengthened.