The Moderating Role of VC/PE Ownership in the Relationship Between Digital Transformation and Corporate Green Innovation Quality: Evidence from Chinese Listed Firms

Abstract

This essay examines the ability of digital transformation to generate valuable green innovation outcomes and whether VC/PE ownership moderates this relationship. In addition, this study's sample covers Chinese listed firms from 2017 to 2024 to measure green innovation quality by green patent citations and identifies VC/PE ownership based on Orbis shareholder ownership data. Furthermore, the empirical results show that green innovation quality is significantly improved by digital transformation, while the direct effect of VC/PE ownership is not significant. More importantly, VC/PE ownership negatively moderated the conversion of digital transformation capabilities into green innovation outputs, suggesting that higher VC/PE ownership may weaken the value of digitalization for green innovation quality. Moreover, this essay adds to the existing literature by shifting attention from green innovation quantity to quality. Also, it shows that external ownership participation may shape how digital capabilities are converted into high-quality green innovation outcomes.