Digital Innovations and Sustainability: A 5-Year Panel Analysis

This research investigates the relationship between digital innovations and sustainability performance, utilizing a firm-level, cross-industry global panel dataset from 2018 to 2022. We measure digital innovation by the number of digital patents filed, and we further capture the environmental, social, and governance (ESG) sustainability metrics. Our methodological approach employs a panel regression analysis incorporating a fixed effect model and a dynamic panel data (DPD) estimator. Our findings reveal mixed effects of digital innovation on sustainability. Specifically, the fixed effects model indicates a negative impact on environmental and governance aspects. In contrast, the dynamic estimator consistently shows a positive effect across all ESG pillars.