The impact mechanism of digital transformation on corporate high-quality development under heterogeneous environmental regulations

Digital transformation (DIT) is a crucial driver for advancing enterprises’ high-quality development (HQD). This paper applies Porter’s effect theory and the knowledge spillover effect to examine the impact mechanism of DIT on HQD under heterogeneous environmental regulations. A two-way fixed effects model and a spatial Durbin model are constructed using panel data from Chinese manufacturing firms spanning the period from 2015 to 2020. The baseline regression result demonstrates that DIT has a significantly positive impact on HQD. This finding is validated through robustness tests, including substituting independent variables, incorporating omitted variables, modifying the regression model, and applying data shrinkage techniques. Additionally, endogeneity concerns are addressed through the propensity score matching method and the instrumental variables approach. Heterogeneity analysis indicates that DIT is more conducive to HQD of non-heavy polluters and labor-intensive firms, but does not show significant heterogeneity across firm size subgroups. Impact mechanism analysis reveals that heterogeneous environmental regulations have distinct moderating effects on this relationship. Further, this paper makes a novel contribution to the existing studies by showing that DIT has a significant positive spatial spillover effect on the HQD of other firms within the same industry and region. As the dominant actor in the market economy, the government should prioritize DIT initiatives among non-heavy polluters and labor-intensive firms, providing increased financial and talent support. Furthermore, strengthening administrative and public oversight of environmental protection could revitalize this relationship. These findings provide valuable insights for policymakers aiming to optimize the business environment and for enterprises seeking to achieve transformation development. © 2025 Elsevier B.V., All rights reserved.