Nonlinear nexus among business environment, digital transformation and ESG performance of private enterprises in China: new insights from mediation-threshold models

By using a mediation-threshold model, we investigate the mechanism by which optimizing the business environment for private enterprises affects their ESG performance. The results indicate that digital transformation exerts a nonlinear effect on the relationship between the business environment and the ESG performance of private enterprises. Specifically, human capital serves as a threshold for the influence of the business environment on digital transformation, with threshold values of 13.64 and 35.59. Research and development (R&D) investment, on the other hand, acts as a threshold for the influence of digital transformation on the ESG performance of private enterprises, with a threshold value of 0.0335. Furthermore, we examine the dynamic changes in the mediating effect of digital transformation. The findings reveal that as the levels of human capital and R&D investment increase, the mediating role of digital transformation becomes more pronounced. Achieving optimal mediation requires substantial initial human capital, preventing enterprises from jumping directly to the highest stage. Consistent R&D investment stabilizes mediation effects, sustaining ESG performance improvements. This study enhances the mediation-threshold model with dynamic analysis, providing deeper insights and policy recommendations to boost human capital and R&D investments for sustainable ESG performance in private enterprises.