Title: Influence of digitalisation on ESG outcomes and its performance across ownership structures
Abstract：Research background: In the context of increasing global emphasis on sustainability, understanding the factors influencing environmental, social and governance (ESG) performance is critical. Whilst state-owned enterprises (SOEs) typically face greater regulatory scrutiny than privately owned enterprises (POEs), the impact ofownership structure onESGoutcomes remains underexplored. Purpose of the article: This study aims to assess how state ownership influences the ESGperformanceof Chinese firms. It seeks to compare the ESGperformanceof SOEs and POEs, explore the relationship between digitalisation and ESGperformance and determine if digitalisation affects ESGoutcomes differently in SOEs versus POEs. Methods: The analysis uses a comprehensive panel dataset comprising 28,259 observations from 4,270 Chinese firms between 2009 and 2022. Robustness checks are conducted by including various fixed effects, employing the Oster (2019) methodology to assess the impact of unobservables, and utilising instrumental variable techniques to address potential reverse causality. Findings & value added: SOEs demonstrate superior ESGperformance compared with POEs, indicating state ownership's positive role in driving sustainability. Digitalisation is positively associated with improved ESGperformance, enhancing corporate sustainability initiatives. The beneficial impact ofdigitalisationonESGperformance is more pronounced in POEs than in SOEs, suggesting that digitalisation compensates for institutional pressures in SOEs. These findings are relevant beyond China, given that they offer insights for other countries that are seeking to balance state influence, corporate governance and digitalisation to achieve sustain-ability goals. Policymakers can use these insights to promote digitalisation as a strategy for enhancing ESGperformance. Investors and managers can utilise the findings to refine their ESG strategies, recognising the differential impacts based onownership and digitalisation.
Keywords:ownership structure; SOE; digitalization; ESG; state-owned enterprises; privately owned enterprises; China
DOI: https://doi.org/10.24136/oc.3155
