From enablement to entrapment: The inverted U-shaped effect of over-digitalization on green innovation

This study explores when digital transformation evolves from an enabling force into a constraint on firms’ green innovation. Drawing on resource orchestration theory, we conceptualize over-digitalization as a structural imbalance between technological intensity and organizational capacity. Using panel data on Chinese A-share listed firms (2001–2023), we find an inverted U-shaped relationship between over-digitalization and green innovation performance. Moderate levels of digitalization enhance flexibility and coordination, but excessive investment undermines absorptive capacity and reduces innovation efficiency. Government subsidies can cushion the negative effects, while managerial discretion intensifies both benefits and drawbacks. State-owned enterprises exhibit weaker declines due to institutional slack and compliance-oriented governance. These findings advance the digitalization-sustainability literature by identifying over-digitalization as a distinct organizational phenomenon and by revealing the nonlinear and context-dependent nature of digital transformation’s impact on green innovation.