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Wang, et al.

time-sensitive and requires further follow-up and on firms’ digital transformation. Of course, this result is
testing. somewhat time-sensitive and requires further follow-up
and testing.
6.4. Corporate environmental, social, and
governance (ESG) performance 7. Discussion
Extreme temperatures heighten public environmental
awareness, compelling enterprises – particularly highly- Our findings revealed that extreme temperature shocks
polluting firms – to adopt sustainable practices. The ESG serve as a significant catalyst for digital transformation
principles, formally advanced by the United Nations in China’s manufacturing sector, corroborating the
in 2004, integrate these priorities into corporate growing literature on climate-induced technological
11
governance. Evidence confirms that ESG reduces agency adaptation. Recent empirical evidence from Chinese
costs, boosts TFP, and enhances innovation, implying manufacturing firms also demonstrated that persistent
47
that it amplifies extreme temperatures’ impact on digital heat waves accelerate digital transformation through
transformation. Based on Fang and Hu’s analysis, we performance-driven mechanisms. 3 The positive
48
measured ESG performance using Huazheng composite relationship persists across robustness tests, suggesting
ratings and constructed an ESG-extreme temperature that manufacturing firms perceive digital transformation
interaction term for empirical testing. Column (4) of as a strategic response to climate disruptions rather
Table 5 and Figure 5D show that the coefficient of the than a temporary adjustment, consistent with the
interaction term is significantly positive, confirming the climate-economic complexity framework where firms
facilitating effect of ESG performance. reconfigure global supply chains to mitigate long-term
economic risks. This aligns with the organizational
1
6.5. Urban digital infrastructure resilience theory, where environmental shocks accelerate
Digital infrastructure construction refers to the innovation adoption as firms seek to mitigate operational
construction of digital network infrastructure, big vulnerabilities through digital technologies that resolve
data, artificial intelligence and other fields, which climate-induced efficiency-cost dilemmas, a pathway
3
provides strong support for development of the digital further reinforced by China’s national policy mandating
economy, smart cities and other fields, favorably digital-green synergies in manufacturing. 54
contributing to economy, innovation, and environment. The identified mechanisms – production cost
Urban digital infrastructure construction promotes escalation and efficiency reduction – provide empirical
the transformation of industrial structure, improves support for the “climate pressure-innovation” hypothesis,
49
enterprise productivity, reduces the cost of innovation as demonstrated in Chinese manufacturing contexts
50
and creativity, enhances the innovation performance of where temperature anomalies amplify operational costs
enterprises, and effectively promotes the development due to energy inefficiency and labor productivity loss.
5
of enterprise innovation activities. In addition, digital As extreme temperatures disrupt traditional production
51
infrastructure construction significantly promotes processes, firms appear to compensate by investing
China’s low-carbon economic growth and brings in digital technologies that enhance operational
about technological optimization and industrial flexibility and resource optimization, reflecting a
upgrading through digital transformation, which, in proactive adaptation strategy that strengthens global
turn, significantly reduces power consumption and value chain resilience. This finding extends the win-
intensity, and thus achieves sustainable economic win hypothesis by demonstrating that environmental
development. 52,53 It is therefore inferred that urban pressures specifically drive digital innovation rather
infrastructure development can enhance the impact of than conventional eco-innovation, a distinction critical
extreme temperatures on the digital transformation of for designing climate-technology policies that leverage
enterprises. To this end, we measured and examined digital infrastructure. 7
the level of digital infrastructure development (DF) in The heterogeneity results offer important nuances. The
cities, in reference to Zhang and Fu. Column (7) of stronger effect observed in private enterprises and high-
52
Table 5 and Figure 5C show that the coefficient of the tech firms may reflect their greater operational flexibility
interaction term between extreme temperature and and innovation capacity compared to SOE. The regional
digital infrastructure is significantly positive, and the disparity, with more pronounced effects in eastern China,
hypothesis is valid that urban digital infrastructure likely stems from better digital infrastructure and greater
development facilitates the role of extreme temperature climate risk exposure in coastal areas. Surprisingly, the

Volume 22 Issue 4 (2025) 134 doi: 10.36922/AJWEP025210166