Abstract:     Promoting green innovation and comprehensively achieving green transformation of economy are significant strategic layouts for China to vigorously promote high-quality economic development. At present, China′s extensive development mode of "high input and low efficiency" has led to more serious problems such as overcapacity, environmental pollution, and resource depletion. In particular, energy-intensive, highly polluting, and inefficient manufacturing companies have become a major source of increased carbon emissions. In this regard, it is urgent to change the disadvantage of low "green concentration" of Chinese enterprises at the technical level, so as to stimulate technological innovation and move up the value chain. Fortunately, digital transformation is pushing more flexible and greener production processes, and optimizing the mobility and integration of production factors, which has a momentous impact on stimulating enterprises′ green innovation. In view of the lack of existing literature on the antecedents of green innovation from the perspective of digital transformation, the present paper proposes the following questions: Can digital transformation directly improve green innovation and what is its potential transmission mechanism? Is there industry heterogeneity in the influence examined? Identifying the results of these problems has far-reaching significance to promote sustainable development and help the government to formulate targeted digital policies.The paper examined the relationship between digital transformation and green innovation by using the data of China′s A-share listed companies from 2012 to 2019 and constructing an industry-time dual fixed effect model. The research results indicated that: digital transformation not only directly improves the green innovation level of enterprises, but also indirectly stimulates green innovation by increasing absorptive capacity and strengthening internal controls. The analysis of industry heterogeneity indicated that compared with non-state-owned enterprises, digital transformation plays a greater role in promoting state-owned enterprises′ green innovation. The digital transformation of non-technology-intensive enterprises has no significant impact on green innovation. Compared with enterprises in areas with weak environmental regulations, digital transformation has a stronger incentive effect on the green innovation of enterprises in areas with strong environmental regulations. With the improvement of the level of green finance, the positive correlation between digital transformation and green innovation remains basically unchanged. The findings will help to provide feasible and favorable policy directions for deepening digital transformation to facilitate green development.The possible innovation of the paper lies in that, on the one hand, the relationship between digitalization and green innovation is clarified from the perspective of micro-subjects, thus solving the long-standing disputes and enriching the understanding of the antecedents of green innovation. On the other hand, the paper provides a framework of "benchmarks-influence mechanism-extensibility analysis (heterogeneity investigation)" and for the first time demonstrates the mediating role of internal control and absorptive capacity between digital transformation and green innovation. This helps to provide clear path guidance for enterprises′ green innovation practice.The findings of this paper have three pivotal policy implications. First, companies need to firmly grasp the idea that digital transformation is an important driver of corporate green innovation. For enterprises, to stimulate technological innovation and construct a cornerstone for green development, they should strengthen the deep integration of digital technologies such as big data, cloud computing, and artificial intelligence with enterprises′ product manufacturing and organizational management. Second, it is necessary to open up the dynamic transmission mechanism of "digital transformation - absorptive capacity / internal control - green innovation", continuously accumulate internal and external knowledge, skills, and experience, and gradually establish confidence in green knowledge restructuring and a good internal governance environment. Ultimately, this ensures the integrity and coordination of building intelligent production systems and intelligent management systems using digital technologies. Third, combined with the results of the heterogeneity test, the government should accurately grasp the unique role of digitalization in different enterprises, attaching importance to the rational allocation between policy formulation, enterprise characteristics, and external conditions, and advocate green development.

Key words: digital transformation, green innovation, absorptive capacity, internal control