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Extreme temperature and enterprise digital transformation

Table 4 reports the results of the mechanism tests. transformation of enterprises may vary depending on
Among them, columns 1, 2, and 3 show results of the cost the nature, capability, and geographical location of
mechanism tests. The coefficient of the interaction term manufacturing enterprises, or whether the characteristics
between employee wage share and extreme temperature is of company management, internal, and external
significantly positive, and the coefficient of the interaction policies of enterprises will have an impact on the digital
term between cost growth rate and extreme temperature transformation effect of extreme temperatures, which
is also significantly positive, suggesting that the effect of needs to be further tested and analyzed.
extreme temperature on digital transformation diminishes
as firms’ production costs increase, while on the contrary, 6.1. Heterogeneity analysis
the coefficient of the interaction term between the share According to the nature of ownership, the listed
of executive compensation and extreme temperature manufacturing enterprises were divided into SOE and
is significantly negative, which proves, in the reverse private enterprises, and the results are shown in Figure 4.
direction, that there is a production cost mechanism. The sample of non-SOE is significant, which may be
Subsequently, the measured TFP of enterprises was related to the greater cost pressure borne by private
integrated into model (4), and the coefficient of the enterprises. Subsequently, manufacturing enterprises
interaction term between TFP and extreme temperature were divided into four groups according to whether they
under the two measures is significantly negative, are high-tech industries and highly polluting enterprises,
indicating that the effect of extreme temperature on the and the results showed that extreme temperatures
digital transformation of enterprises attenuates with have the most obvious effect on high-tech enterprises,
the enhancement of their production efficiency, and the which have stronger foundations, better technologies,
production efficiency mechanism exists. more talents, etc., and are more favorable to engage
in digital transformation. To examine the geographical
6. Further analysis differences, the manufacturing enterprises will be
divided into three groups according to the place of
The distribution of extreme temperatures has registration in the east, central and west China, and the
geographical differences, and its effect on the digital results showed that the impact of extreme temperatures

Table 4. Extreme temperatures and enterprise digital transformation: mechanistic analysis

Explained variable: Digital 2 Cost mechanism Efficiency mechanism
(1) (2) (3) (4) (5)
Extreme *Wage 1 0.007**
j, t
(0.003)
Extreme *Wage −0.007**
j, t 2
(0.003)
Extreme *Cost 0.001*
j, t
(0.000)
Extreme *TPF_OLS −0.005*
j, t
(0.003)
Extreme *TPF_LP −0.005*
j, t
(0.003)
Extreme Yes Yes Yes Yes Yes
j, t-1
Control variables Yes Yes Yes Yes Yes
Other climate variables Yes Yes Yes Yes Yes
Industry-fixed effects Yes Yes Yes Yes Yes
Year-fixed effects Yes Yes Yes Yes Yes
Observations 12,908 12,908 12,908 12,908 12,908
R-squared 0.248 0.323 0.323 0.366 0.319

Volume 22 Issue 4 (2025) 131 doi: 10.36922/AJWEP025210166