From symbolic to substantive: How digital transformation reduces greenwashing

Greenwashing remains a critical challenge in heavily polluting industries, undermining corporate environmental credibility. While institutional theory emphasizes that companies greenwash their environmental information to conform to external pressures, the resource-based view (RBV) highlights the importance of internal resources and capabilities in shaping strategic behavior. Against this backdrop, digital transformation offers corporations new opportunities to enhance sustainability. This study aims to examine the positive effect of digital transformation in curbing greenwashing as well as the mediating role of environmental performance. Using the data of Chinese listed companies in heavily polluting industries between 2019 and 2023, this study finds that digital transformation significantly inhibits greenwashing, and this effect is partially mediated by improvements in environmental performance. Heterogeneity analysis further reveals that the inhibitory effect of digital transformation is more pronounced in companies with a high proportion of institutional investors and intense industry competition. These findings provide empirical evidence for the decoupling concept in institutional theory, illustrating how internal capabilities bridge the gap between symbolic environmental commitments and substantive outcomes. The findings also reinforce the RBV framework by validating the ‘resources–capabilities–competitive advantage–strategy’ pathway, demonstrating that digital transformation enhances environmental performance and corporate sustainability strategies. Overall, this study contributes to the literature by highlighting the internal mechanisms through which digital transformation mitigates greenwashing and offers practical insights for companies and stakeholders seeking to promote sustainable development in heavily polluting industries.