Unveiling the relation between digital technology and low-carbon innovation: Carbon emission trading policy as an antecedent

While the carbon emission trading policy presents an opportunity for firms to concurrently advance in digital technology and low-carbon innovation, the existing literature falls short in elucidating the relationship between the two. Therefore, based on the sample of Chinese A-share listed companies from 2007 to 2021, this study examines the impact of digital technology on low-carbon innovation under the carbon emission trading policy by using DID model, moderating variable and other methods. The results show that digital technology is positively correlated with low-carbon innovation under the carbon emission trading policy. Secondly, digital technology breadth and depth emerge as dual facilitative avenues. However, carbon emission trading schemes appears to curb the impact of the digital technology depth. Thirdly, technological capability is a key resource in moderating the relationship between digital technology and low-carbon innovation. Internal control, however, exerts a significant moderating effect exclusively on digital technology breadth. Finally, drawing from the analysis of company differentiation, the study conclude that smaller firms and research and development (R&D)-oriented firms are better poised to implement strategic plans that harmonize digital technology and low-carbon innovation.