Temperature shocks as an accelerator for digital transformation of manufacturing firms: Evidence from China

Temperature shocks can cause various adverse effects on manufacturing firms, such that the adaptation activities of manufacturing firms to temperature shocks need to be focused on. Accordingly, this paper aims to investigate whether and why temperature shocks could be an accelerator for digital transformation of manufacturing firms. Empirical results suggest that extreme heat waves can propel manufacturing firms to strengthen their digital transformation orientation, while cold waves cannot. The effect of extreme heat waves on digital transformation orientation is likely to be performance-driven, rather than pro-environmental responsibility-driven. In addition, we indicate that there exist temperature adaptation effects, such that manufacturing firms located in areas with long-term exposure to extreme temperatures are less likely to strengthen digital transformation orientation after extreme temperature shocks, relative to those located in long-term temperature comfort regions.