Trust (in)congruence, digital technological innovation, and firms' ESG performance: A polynomial regression with response surface analysis.

We examine whether and how the different types of digital technology innovation (DTI) affect corporate ESG performance. Based on patents' information, we classify DTI into symbolic DTI and substantive DTI. Specifically, symbolic DTI is the innovation driven by firms' legitimacy strategy, while substantive DTI is the type of innovation that helps strengthen firms' competitive advantages. Using a sample of Chinese A-share-listed firms from 2009 to 2020, we use polynomial regression and response surface analysis to examine how firms balance the tension between competitiveness and legitimacy through digital technological innovations in order to achieve optimal corporate ESG performance. We find that there is an inverted U-shaped relationship between symbolic DTI and corporate ESG performance. Meanwhile, there is a simple positive correlation between substantive DTI and corporate ESG performance. Moreover, the incongruence between the two types of DTI significantly hurts corporate ESG performance and is mainly concentrated in firms with high symbolic-low substantive DTI strategy. Further analyses show that corporate managerial myopia positively (negatively) affects the relationship between symbolic (substantive) DTI and ESG performance. Our paper expands the literature on the relationship between DTI and firms' ESG performance. It provides managerial insights for the Chinese government to encourage digital economy development and promotes firms' substantive DTI to enhance their ESG performance.