How Does Artificial Intelligence Capability Foster Sustainable Green Innovation? Evidence from Chinese Listed Firms

Abstract

Artificial intelligence (AI) is increasingly viewed as a key driver of sustainable development, yet evidence on its role in corporate sustainable green innovation remains limited. Drawing on Resource Orchestration Theory and Signaling Theory, this study examines the impact of AI capability on sustainable green innovation using panel data from Chinese A-share listed companies during 2014–2023. The results show that stronger AI capability significantly promotes sustainable green innovation. AI investment serves as a mediating mechanism. However, the estimated indirect effect is negative, suggesting that the process of AI implementation may involve resource reallocation and organizational adjustment costs before innovation benefits can be fully realized. Environmental investment strengthens the positive impact of AI capability, whereas digital transformation weakens it. Robustness tests confirm the reliability of the findings. Further analyses indicate that the positive effect of AI capability is more pronounced in non-state-owned enterprises, low-technology firms, and firms in the growth stage. By revealing the mechanisms and boundary conditions through which AI capability influences sustainable green innovation, this study enriches the literature on AI-enabled sustainability and offers practical insights for firms pursuing long-term sustainable development.