Caihua Zhang, Kunjian Zhao, Xue Lei
The textile industry faces increasing dual pressures of digital transformation and environmental compliance due to its traditionally resource-intensive and pollution-heavy operations. Simultaneously, textile manufacturers struggle with accessing sufficient capital for green technology investments despite urgent sustainability imperatives. This study examines how data asset capitalisation drives green innovation through alleviating financing constraints. Analysing Chinese textile listed firms (2013–2023), we find that data-rich companies achieve significantly greater environmental innovation performance. Our text-based measure of data assets reveals they function as quality signals to capital markets, reducing information asymmetry and easing resource constraints for green investments. This effect is amplified by analyst coverage and becomes more pronounced under environmental uncertainty and regulatory pressure. The temporal analysis shows an inverted U-shaped pattern with peak influence occurring two years after data asset development, suggesting an incubation period for capability building. Using geographic distance to data trading centres as an instrumental variable confirms the causal relationship. The findings highlight a critical pathway through which digital transformation catalyses sustainable development in the textile industry, bridging information economics and environmental innovation literature. Our research provides practical implications for textile manufacturers seeking to leverage digital capabilities for environmental competitiveness and for policymakers designing incentives at the intersection of digital and green development.