Impact of digitalization and environmental regulation on total factor productivity

Clean production and digitalization are the main directions of global manufacturing development under the new industrial revolution. Based on the application of digital technologies in enterprises caused by the smart city construction in China, this study adopts the difference-in-difference method to investigate the impact of digitalization and environmental regulation on total factor productivity. Using panel data on Chinese manufacturing listed enterprises from 2008 to 2019, this study finds that digitalization and environmental regulation can significantly improve the total factor productivity. It also shows that digital-ization improves the total factor productivity of manufacturing enterprises by reducing transaction costs, facilitating servitization, and stimulating innovation investment. In addition, environmental regulation can force manufacturing enterprises to transform and improve their total factor productivity. However, the in-teraction between environmental regulation and digitalization has a significant negative impact on total factor productivity, implying that the paths of clean transformation and digitalization transformation is not coordinated. Our findings have implications for enacting effective policies to help manufacturing en-terprises achieve digital transformation and clean production. (c) 2022 Elsevier B.V. All rights reserved.

Automated summary

This study investigates the impact of digitalization and environmental regulation on total factor productivity in Chinese manufacturing. The results show that both digitalization and environmental regulation can significantly improve total factor productivity, but the interaction between them has a negative impact.