How does environmental regulations affect digital green innovation of high-pollution enterprises? Empirical evidence from China.

Digital green innovation (DGI) is crucial for high-pollution enterprises to improve green performance. However, there is a paradox regarding the impact of environmental regulations on DGI, primarily due to the varied effects of diverse regulatory tools. To resolve this paradox, based on Neoclassical Economics and the Porter Hypothesis, we empirically examine the influence of heterogeneous environmental regulations on DGI using a sample of high-pollution enterprises in China. The conclusions indicate that environmental protection tax has a pushing-forward effect on DGI, while environmental protection subsidy has a crowding-out effect. Moreover, enterprises' resource base and technological innovation capability positively moderate the impact of environmental protection tax. External pressure, internal incentives, pandering to governments, and managerial opportunism have mediating effects. Our research offers a new perspective to resolve the paradox of the effect of environmental regulations on DGI, explores potential mechanism as well as boundary condition, and proposes a new way of measuring DGI of enterprises with patents. Accordingly, we offer valuable policy recommendations about the formulation of environmental regulations, the facilitation of DGI, and the advancement of China's ecological civilization.