The impact of extreme temperature shocks on enterprise digital transformation: Evidence from Chinese listed manufacturing companies

Abstract

Global warming and extreme temperature shocks pose significant challenges to human societies. While much research focuses on the economic hazards of extreme temperatures, exploring proactive countermeasures holds greater research value. Utilizing daily meteorological data from prefecture-level cities in China and panel data from listed manufacturing companies (2011 - 2022), we constructed a city-level extreme temperature index in this study and employed a two-way fixed-effects model to empirically examine the impact of extreme temperatures on the digital transformation of manufacturing enterprises. The results revealed that extreme temperatures significantly predict digital transformation, a finding robust to various tests. Mechanism analysis indicated that extreme temperatures increase production costs and reduce efficiency, thereby accelerating digital transformation. Heterogeneity analysis further demonstrated that the effect is more pronounced in private enterprises, high-tech firms, and non-high-pollution industries, with a stronger impact observed in the eastern region of China. In addition, corporate environmental, social, and governance disclosure, executive rejuvenation, and digital infrastructure construction positively moderated this relationship, whereas the implementation of carbon trading policies partially weakened the effect. This study not only underscores the micro-level impacts of climate change but also provides valuable insights for enterprises seeking to mitigate the effects of extreme temperature events through digital transformation.

Keywords

Climate change / Extreme temperatures / Digital transformation / Manufacturing companies

Funding

This work was supported by the Foundation of the Science Research Project of Yunnan Education Department (2023J0207) and the Yunnan Philosophy and Social Science Foundation (YB2023089).

Conflict of interest

At the time of writing this manuscript, Ruling Ma was employed by Hongta Group Yuxi Cigarette Factory, but the company/employer did not play any roles in the study design and writing of the manuscript. No reference to the author’s company is made.

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