Executive Overconfidence, Digital Transformation and Environmental Innovation: The Role of Moderated Mediator

Abstract

With the increasingly prominent energy and environmental problems, environmental innovation has become a critical path to achieving the goal of coordinating economic development and environmental protection fundamentally. This study aims to examine the impacts of executive overconfidence on environmental innovation and the mediating role of digital transformation. We conduct empirical tests based on the panel data of Chinese publicly listed enterprises during the period of 2007–2019. The results exhibit that (a) executive overconfidence can significantly promote environmental technology innovation but has no obvious effect on environmental management innovation; (b) executive overconfidence can significantly enhance digital transformation, and, accordingly, digital transformation can significantly promote environmental technology innovation and environmental management innovation; (c) industry competition and economic policy uncertainty can enhance the positive effect of executive overconfidence on digital transformation; and (d) a firms’ asset size can enhance the impact of digital transformation on environmental technology innovation; internal control positively moderates the impact of digital transformation on environmental technology innovation and negatively moderates the impact on environmental management innovation. This study not only breaks the stereotype about overconfidence and confirms its positive impact on digital transformation and environmental innovation but also provides insights for enterprises to improve environmental innovation through digital transformation.

Digital Transformation on Enterprise Green Innovation: Effect and Transmission Mechanism

“…Green innovation is generally regarded as an innovation paradigm that considers ecological environmental protection and sustainable development, also known as ecological innovation or environmental technology innovation [ 60 ], which is specifically manifested in new processes, new technologies, and new products of enterprises in energy conservation, emission reduction, pollution control, green services, and other aspects [ 5 , 6 ]. Some scholars believe that green innovation refers to the use of environmentally friendly raw materials in the manufacturing or design process, to develop sustainable products and services [ 7 , 8 ].…”

“…As an innovative paradigm integrating the concepts of ecological environment protection and sustainable development, green innovation is mainly manifested in the design and development of new processes, new technologies, and new products conducive to energy conservation, emission reduction, and environmental protection [ 5 , 6 ]. With the deep penetration of the concept of sustainable development, green innovation also emphasizes the renewable design and environmental-protection process management of the whole innovation industry chain [ 7 , 8 ].…”

Celebrity CEOs, digital transformation and firm performance in China: the moderating role of controlling shareholders and institutional investors

“…It can fully meet the realistic needs of celebrity CEOs who constantly aim to improve their performance levels and maintain their celebrity identity and status. At the same time, digital transformation is a typical type of risk strategy characterized by high investment costs, long return cycles, high implementation difficulties, and significant uncertainties ( Cortellazzo et al, 2019 ; Zhou et al, 2022 ). This aligns with the pursuit of risks and challenges driven by celebrity CEOs.…”

“…Existing research focuses on the strategic effectiveness and economic consequences of digital transformation, such as improving company efficiency, optimizing production processes, continuously innovating at the forefront of technology, maintaining market competitiveness, and influencing enterprises’ internationalization processes ( Sousa and Rocha, 2019 ; Romero-Martínez and García-Muiña, 2021 ; Verhoef et al, 2021 ; Feliciano-Cestero et al, 2023 ). Some studies also examined digital transformation as a mediating variable to investigate the promoting effect of digital technology usage on firm performance ( Tsou and Chen, 2023 ), and the promoting effect of Executive Overconfidence on Environmental Innovation ( Zhou et al, 2022 ). Few scholars have explored the antecedents of corporate digital transformation.…”

CEOs' digital technology backgrounds and enterprise digital transformation: The mediating effect of R&D investment and corporate social responsibility

“…Many studies have examined the impact of CEOs' different characteristics on the digital transformation of organizations based on imprinting theory. For example, CEOs' overseas work experience, overconfidence, social network capital, and political connections significantly contribute to EDT (Chen et al, 2022; Hu et al, 2022; Qi et al, 2022; Zhou et al, 2022). Moreover, an inverted U‐shaped relationship exists between CEO stock ownership and EDT, which shapes the relationship between CEO ownership and enterprise digital transformation (EDT) (Chen & Yang, 2022).…”