Digital Technology Uncertainty Exposure and Corporate Green Innovation: Evidence from Chinese A-share Listed Firms

Abstract

This study investigates how digital technology uncertainty exposure (DTUE) affects corporate green innovation, comprising green exploratory and green exploitative innovation, among Chinese A-share listed firms from 2012 to 2023. Constructing firm-level DTUE indicators through a DeepSeek-V3 and FinBERT Large Language Model (LLM) pipeline applied to Management Discussion and Analysis (MD&A) disclosures, we find that DTUE significantly suppresses green exploratory innovation (β = −0.046, p < 0.01) while exerting no significant effect on green exploitative innovation. Drawing on threat-rigidity theory, upper echelons theory, and resource orchestration theory, we theorize that DTUE triggers managerial risk aversion and crowds out R&D resources, disproportionately impairing high-uncertainty green exploration. Leveraging the staggered adoption of city-level Environmental Policy Technology Compliance Guidelines (EPTCG) as a quasi-natural experiment, multi-period difference-in-differences (DID) estimates confirm that effective environmental digital governance enhances green exploratory innovation. Mechanism tests validate two channels: managerial risk preference (psychological) and green R&D diversion (resource). Heterogeneity analyses reveal that the inhibitory effects are stronger in low-regulation environments, non-SOEs, technology-intensive sectors, and eastern China. These findings enrich the literature on digital risk and sustainable innovation and carry policy implications for strengthening digital governance within environmental frameworks.

Keywords: digital technology uncertainty; green innovation; exploratory innovation; threat-rigidity theory; LLM; difference-in-differences