Empirical Analysis of Digital Innovations Impact on Corporate ESG Performance: The Mediating Role of GAI Technology

Abstract: This study investigates the relationship between corporate digital innovation and Environmental, Social, and Governance (ESG) performance, with a specific focus on the mediating role of Generative artificial intelligence technology adoption. Using a comprehensive panel dataset of 8,000 observations from the CMARS and WIND database spanning from 2015 to 2023, we employ multiple econometric techniques to examine this relationship. Our findings reveal that digital innovation significantly enhances corporate ESG performance, with GAI technology adoption serving as a crucial mediating mechanism. Specifically, digital innovation positively influences GAI technology adoption, which subsequently improves ESG performance. Furthermore, our heterogeneity analysis indicates that this relationship varies across firm size, industry type, and ownership structure. Finally, our results remain robust after addressing potential endogeneity concerns through instrumental variable estimation, propensity score matching, and differenc in differences approaches. This research contributes to the growing literature on technologydriven sustainability transformations and offers practical implications for corporate strategy and policy development in promoting sustainable business practices through technological advancement.