Conference Theme Track A: IS for Sustainability
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Paper Number
2553
Paper Type
Completed
Description
Drawing upon the Porter Hypothesis, this study examines whether energy efficiency regulation for data centers can increase firms’ data center-related green innovation (i.e., green data center innovation) and subsequently their firm value. We exploit a natural experiment using the revision of California’s Title 24 in 2013, which imposed energy efficiency requirements to data centers. Using a difference-in-differences framework based on data from 347 US IT firms, we find that the regulation enactment is positively associated with the increase in the number of corporate patents relating to green data centers in California-headquartered IT firms, compared to non-California-based firms. Moreover, the California-headquartered IT firms have experienced a significant increase in firm value after this regulation went into effect, and this effect appears to be partially mediated by green data center innovation. The results highlight that green IT innovation can be a viable means to enhance firm value while complying with environmental regulations.
Recommended Citation
Park, Jiyong; Chung, Sunghun; and Han, Kunsoo, "Toward Green Data Centers: Environmental Regulation, Green Data Center Innovation, and Firm Value" (2021). ICIS 2021 Proceedings. 11.
https://aisel.aisnet.org/icis2021/is_sustain/is_sustain/11
Toward Green Data Centers: Environmental Regulation, Green Data Center Innovation, and Firm Value
Drawing upon the Porter Hypothesis, this study examines whether energy efficiency regulation for data centers can increase firms’ data center-related green innovation (i.e., green data center innovation) and subsequently their firm value. We exploit a natural experiment using the revision of California’s Title 24 in 2013, which imposed energy efficiency requirements to data centers. Using a difference-in-differences framework based on data from 347 US IT firms, we find that the regulation enactment is positively associated with the increase in the number of corporate patents relating to green data centers in California-headquartered IT firms, compared to non-California-based firms. Moreover, the California-headquartered IT firms have experienced a significant increase in firm value after this regulation went into effect, and this effect appears to be partially mediated by green data center innovation. The results highlight that green IT innovation can be a viable means to enhance firm value while complying with environmental regulations.
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01-Sustainability