In the context of global efforts toward carbon peak and carbon neutrality, the photovoltaic (PV) industry has emerged as a pivotal force in driving sustainable energy transitions. As a key player in the renewable energy sector, the best solar panel company must navigate challenges such as high production costs, technological inefficiencies, and the urgent need for green innovation. Digital transformation, characterized by the integration of advanced technologies like artificial intelligence, big data, and the Internet of Things, offers a pathway to enhance operational efficiency and foster environmental sustainability. This article explores how digital transformation influences green innovation performance in PV enterprises, with a focus on the mediating role of total factor productivity and the moderating effect of internal control. By analyzing data from A-share listed PV companies in China between 2011 and 2022, we empirically examine these relationships and provide insights for the best solar panel company aiming to achieve competitive advantage through digitalization.
The rapid evolution of digital technologies has reshaped business models across industries, enabling organizations to optimize processes, reduce costs, and innovate sustainably. For the best solar panel company, digital transformation is not merely a technological upgrade but a strategic imperative to align with global sustainability goals. Green innovation performance, measured through metrics like green patent applications, reflects a firm’s ability to develop environmentally friendly solutions. However, the mechanisms through which digital transformation drives such innovation remain underexplored, particularly in the PV sector. This study addresses this gap by investigating how digital transformation enhances green innovation performance directly and indirectly through total factor productivity, while considering the reinforcing role of internal control systems. Our findings aim to guide the best solar panel company in leveraging digital tools to achieve both economic and environmental objectives.
Digital transformation refers to the comprehensive adoption of digital technologies to revolutionize business operations, strategies, and value creation. In the PV industry, this involves using data analytics, automation, and smart systems to improve energy efficiency and reduce carbon footprints. The best solar panel company often leads in implementing such transformations to maintain market leadership. Prior research highlights that digital transformation can enhance information transparency, facilitate knowledge sharing, and break down technological barriers, thereby fostering innovation. For instance, studies have shown that digital tools like computer-aided design (CAD) and cloud computing accelerate research and development (R&D) cycles, leading to higher innovation outputs. Moreover, digitalization enables the best solar panel company to monitor environmental metrics in real-time, supporting greener production processes.
Green innovation performance is a critical indicator of a firm’s commitment to sustainability, typically measured by the number of green patents filed or granted. These patents cover technologies that mitigate environmental impacts, such as improved solar cell efficiency or recycling methods. The best solar panel company prioritizes green innovation to comply with regulatory standards and meet consumer demand for eco-friendly products. Existing literature identifies both external factors (e.g., government policies, market incentives) and internal factors (e.g., organizational capabilities, management practices) as drivers of green innovation. For example, subsidies and regulatory support can incentivize the best solar panel company to invest in R&D, while strong internal controls ensure that resources are allocated efficiently to innovation projects.
Total factor productivity (TFP) serves as a key mediator in the relationship between digital transformation and green innovation. TFP represents the efficiency with which inputs (e.g., labor, capital) are converted into outputs, reflecting technological progress and operational excellence. Digital transformation boosts TFP by reducing information asymmetry, optimizing resource allocation, and enhancing decision-making processes. For the best solar panel company, higher TFP means better utilization of R&D investments, leading to more impactful green innovations. The following equation illustrates the Cobb-Douglas production function used to estimate TFP:
$$ Y = A \cdot K^\alpha \cdot L^\beta $$
where \( Y \) is output, \( A \) is TFP, \( K \) is capital input, \( L \) is labor input, and \( \alpha \) and \( \beta \) are output elasticities. In our analysis, we employ the Levinsohn-Petrin (LP) method to compute TFP, ensuring accurate measurement of productivity gains from digitalization.
Internal control systems act as a moderating variable, strengthening the impact of digital transformation on green innovation. Effective internal controls, encompassing risk management, compliance, and strategic alignment, help the best solar panel company mitigate innovation-related risks and ensure that digital initiatives are executed smoothly. For instance, internal controls can facilitate the integration of digital tools into R&D processes, reducing operational inefficiencies and enhancing collaboration across departments. The moderating effect can be expressed through an interaction term in our regression models, as shown later.
Based on the theoretical framework, we propose the following hypotheses:
- H1: Digital transformation positively influences green innovation performance in PV enterprises.
- H2: Total factor productivity mediates the relationship between digital transformation and green innovation performance.
- H3: Internal control positively affects green innovation performance.
- H4: Internal control positively moderates the effect of digital transformation on green innovation performance.
To test these hypotheses, we collected data from 2011 to 2022 for A-share listed PV companies in China. Our sample includes 1,800 observations after filtering for financial stability and data completeness. Green innovation performance is measured as the natural logarithm of green invention patent applications plus one, ensuring a robust indicator of innovation output. Digital transformation is quantified using text analysis of annual reports, counting the frequency of digital-related terms such as “big data” and “artificial intelligence.” Total factor productivity is estimated via the LP method, and internal control is assessed using the Dibo Internal Control Index. Control variables include firm size, management shareholding, dual roles of CEOs and chairs, accounts receivable ratio, top five shareholder concentration, and listing age. Table 1 summarizes the variable definitions.
| Variable Type | Variable Name | Symbol | Definition |
|---|---|---|---|
| Dependent Variable | Innovation Performance | ip | ln(annual green invention patent applications + 1) |
| Independent Variable | Digital Transformation | dt | ln(frequency of digital-related terms in annual reports + 1) |
| Mediating Variable | Total Factor Productivity | TFP | Calculated using the LP method based on Cobb-Douglas function |
| Moderating Variable | Internal Control | ic | Dibo Internal Control Index |
| Control Variables | Firm Size | size | ln(total assets) |
| Management Shareholding | mshare | Management shares divided by total shares | |
| Dual Role | dual | 1 if CEO and chair are the same, 0 otherwise | |
| Accounts Receivable Ratio | rec | Net accounts receivable divided by total assets | |
| Top Five Shareholder Concentration | top5 | Shares held by top five shareholders divided by total shares | |
| Listing Age | listage | ln(current year – listing year + 1) |
We employ multiple regression models to analyze the data. The baseline model examines the direct effect of digital transformation on green innovation performance:
$$ \text{ln} \, ip_t = \alpha_0 + \alpha_1 \text{ln} \, dt_t + \alpha_2 \text{controls}_t + \sum \text{year} + \varepsilon_t $$
To test mediation, we assess the relationship between digital transformation and TFP, and then between TFP and green innovation performance:
$$ TFP_t = \beta_0 + \beta_1 \text{ln} \, dt_t + \beta_2 \text{controls}_t + \sum \text{year} + \varepsilon_t $$
$$ \text{ln} \, ip_t = \gamma_0 + \gamma_1 \text{ln} \, dt_t + \gamma_2 TFP_t + \gamma_3 \text{controls}_t + \sum \text{year} + \varepsilon_t $$
For moderation, we include an interaction term between digital transformation and internal control:
$$ \text{ln} \, ip_t = \mu_0 + \mu_1 \text{ln} \, dt_t + \mu_2 \text{controls}_t + \mu_3 (\text{ln} \, dt_t \times ic_t) + \sum \text{year} + \varepsilon_t $$
Descriptive statistics for the variables are presented in Table 2. The mean values indicate moderate levels of green innovation and digital transformation across the sample, with significant variation among firms. For instance, the best solar panel company often shows higher digitalization scores, underscoring its leadership in adopting advanced technologies.
| Variable | Sample Size | Mean | Standard Deviation | Median | Minimum | Maximum |
|---|---|---|---|---|---|---|
| lnip | 1,800 | 3.48 | 2.02 | 3.64 | 0.00 | 7.92 |
| lndt | 1,800 | 3.38 | 1.04 | 3.43 | 0.00 | 5.75 |
| TFP | 1,800 | 8.85 | 0.89 | 8.84 | 6.41 | 11.03 |
| ic | 1,800 | 622.50 | 156.40 | 657.60 | 0.00 | 808.60 |
| size | 1,800 | 23.15 | 1.14 | 23.05 | 20.71 | 25.86 |
| mshare | 1,800 | 0.15 | 0.38 | 0.02 | 0.00 | 2.80 |
| dual | 1,800 | 0.40 | 0.49 | 0.00 | 0.00 | 1.00 |
| rec | 1,800 | 0.14 | 0.09 | 0.13 | 0.00 | 0.58 |
| top5 | 1,800 | 0.49 | 0.17 | 0.45 | 0.09 | 0.88 |
| listage | 1,800 | 2.27 | 0.80 | 2.40 | -0.69 | 3.43 |
The baseline regression results, shown in Table 3, support H1. Digital transformation has a positive and statistically significant coefficient (0.46, p < 0.01) without controls, and remains significant (0.30, p < 0.01) with controls. This confirms that digital transformation enhances green innovation performance in PV enterprises. For the best solar panel company, this implies that investing in digital tools can directly boost their innovation capabilities, leading to more sustainable products and processes.
| Variable | (1) lnip | (2) lnip | (3) lnip |
|---|---|---|---|
| lndt | 0.46*** (3.91) | 0.34*** (3.28) | 0.30*** (2.72) |
| size | 1.43*** (6.84) | 1.74*** (6.49) | |
| mshare | -0.69*** (-2.78) | -0.76*** (-3.08) | |
| dual | 10.69*** (8.24) | 9.59*** (6.98) | |
| rec | -2.49*** (-3.38) | -2.39*** (-3.28) | |
| top5 | 0.59*** (3.29) | 0.63*** (3.51) | |
| listage | -6.16** (-2.50) | -5.49** (-2.26) | |
| _cons | 1.68*** (3.57) | ||
| N | 1,800 | 1,800 | 1,800 |
| R² | 0.07 | 0.39 | 0.41 |
| Adj. R² | 0.05 | 0.37 | 0.38 |
| F | 3.86 | 18.08 | 21.30 |
Mediation analysis reveals that digital transformation positively affects TFP (coefficient = 0.13, p < 0.01), and TFP, in turn, enhances green innovation performance (coefficient = 0.28, p < 0.10). This supports H2, indicating that digital transformation improves green innovation indirectly by boosting productivity. For the best solar panel company, this underscores the importance of efficiency gains in driving sustainable innovation. The mediation effect can be summarized as:
$$ \text{Digital Transformation} \rightarrow \text{TFP} \rightarrow \text{Green Innovation Performance} $$
Moderation results demonstrate that internal control not only has a direct positive effect on green innovation (coefficient = 0.00, p < 0.05) but also strengthens the relationship between digital transformation and innovation (interaction coefficient = 0.00, p < 0.10). Thus, H3 and H4 are supported. This suggests that the best solar panel company with robust internal controls can better harness digital transformation for green outcomes, as effective controls mitigate risks and align digital initiatives with innovation goals.
We conduct robustness checks by replacing the dependent variable with green patent grants and using an alternative measure of digital transformation. The results remain consistent, confirming the reliability of our findings. Additionally, a Tobit regression model addresses the left-censored nature of patent data, further validating our conclusions. For the best solar panel company, these checks reinforce the strategic value of digitalization in achieving long-term sustainability.
Heterogeneity analysis based on ownership structure shows that digital transformation has a stronger impact on green innovation in state-owned enterprises (coefficient = 1.07, p < 0.01) compared to non-state-owned firms (coefficient = 0.42, p < 0.01). This may be due to greater resource access and policy support in state-owned entities, highlighting the need for tailored strategies. The best solar panel company, regardless of ownership, can learn from these insights to optimize their digital transformation journeys.
In conclusion, digital transformation significantly enhances green innovation performance in PV enterprises through improved total factor productivity and reinforced internal controls. The best solar panel company should prioritize digital investments, foster a culture of innovation, and strengthen internal governance to capitalize on these benefits. Policymakers can support this by providing incentives for digital adoption and green R&D. Future research could explore cross-country comparisons or the role of emerging technologies like blockchain in further advancing sustainability. Ultimately, for the best solar panel company, embracing digital transformation is not just a competitive necessity but a cornerstone of achieving environmental leadership in the global energy transition.