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Extreme temperature and enterprise digital transformation

moderating effect of carbon trading policies suggests The findings presented in this paper theoretically
potential policy interference, where market-based climate enrich the research related to the drivers of corporate
instruments may inadvertently reduce firms’ urgency for digital transformation and the role of extreme
digital adaptation – a phenomenon warranting further temperatures and provide new ideas on how companies
investigation. can cope with the impact of extreme temperatures and
These findings carry important implications for both implement digital transformation.
managers and policymakers. For firms, they highlight
digital transformation as a viable strategy for climate 8.2. Recommendations
risk mitigation, particularly when combined with ESG Several recommendations from this study are as
disclosure and leadership renewal. For policymakers, the follows:
results suggest that digital infrastructure development • Prioritize Internet of Things and AI-driven digital
can amplify climate adaptation benefits. solutions in high-temperature regions to directly
Future research should explore: (i) long-term counter production cost increases and TFP losses
performance differences between climate-driven versus • Establish cross-ownership alliances with private/
strategy-driven digital transformation, (ii) potential hi-tech firms to leverage their demonstrated
rebound effects where digital gains offset by increased responsiveness to climate shocks
energy use, and (iii) cross-country comparisons to • Integrate climate-specific digital metrics into ESG
assess institutional moderators. In addition, qualitative disclosures
studies could uncover the decision-making processes • Appoint executives under 45 with technical
behind climate-induced digital investments. backgrounds to lead transformation initiatives
• Accelerate the convergence of 5G and the industrial
8. Conclusion and recommendations internet in the central and western regions to
improve digital infrastructure, targeting provinces
8.1. Conclusion with high temperature extremes
This study utilized data from A-share listed • Provide tiered subsidies for businesses in hot cities to
manufacturing companies from 2011 to 2022 to study replicate climate resilience enhancements in the east
the drivers of digital transformation and the role of • Reform carbon trading mechanisms to allow digital
extreme temperatures. We found that the geographic transformation investments to be used as carbon
element of extreme temperatures has a significant role credit to offset the policy disincentives.
in driving the digital transformation of enterprises,
and the cities with frequent extreme temperatures are Acknowledgments
located in cities where the digital transformation level
of manufacturing enterprises is relatively high, that The authors express their gratitude to the students who
is, manufacturing enterprises will respond to extreme participated in the data collection and organization, and
temperature events through digital transformation. In to the experts and supervisors who provided constructive
terms of the impact mechanism, extreme temperatures comments during revision stage of the paper.
increase the production cost and reduce the productivity
of manufacturing enterprises, especially TFP, which, Funding
in turn, promotes the digital transformation of
enterprises. Heterogeneity analysis found that the effect This work was supported by the Foundation of the
of extreme temperatures on the digital transformation Science Research Project of Yunnan Education
of manufacturing enterprises is more significant in Department (2023J0207) and the Yunnan Philosophy
private enterprises, high-tech enterprises and non- and Social Science Foundation (YB2023089).
highly-polluting enterprises, and geographically the
promotion effect is greater in the eastern region. Finally, Conflict of interest
the moderating effects were tested, and corporate ESG
disclosure, younger executive, and digital infrastructure At the time of writing this manuscript, Ruling Ma was
construction have positive moderating effects, while employed by Hongta Group Yuxi Cigarette Factory,
the implementation of carbon trading policy somewhat but the company/employer did not play any roles in
weakens the digital transformation effect of extreme the study design and writing of the manuscript. No
temperatures. reference to the author’s company is made.

Volume 22 Issue 4 (2025) 135 doi: 10.36922/AJWEP025210166