Abstract: The digital-green synergistic transformation (referred to as “dual synergy”) in manufacturing firms is an inevitable requirement for developing new quality productive forces and advancing high-quality development, as well as a critical pathway to enhance corporate competitiveness. Existing studies, both domestic and international, have separately explored the impacts of digital and green transformations on the performance of manufacturing enterprises, yet research on the impacts of dual synergy transformation remains scarce. This paper, based on data from China’s A-share listed manufacturing firms from 2007 to 2022, constructs a dual synergy index for manufacturing firms using the coupling model method and empirically tests the impact of dual synergy on firm performance. The findings reveal a nonlinear U-shaped relationship between dual synergy and firm performance, where positive benefits emerge only after a threshold is crossed. Mechanism analysis indicates that both efficiency and cost channels mediate this relationship: dual synergy first suppresses and then promotes efficiency (U-shaped), while initially increasing and subsequently reducing costs (inverted U-shaped), thereby influencing performance. Environmental regulation and industrial structure rationalization moderate the U-shaped relationship between dual synergy and firm performance, with stronger environmental regulation and higher industrial structure rationalization flattening the curve. Heterogeneity analysis shows that the U-shaped relationship holds for both heavily and non-heavily polluting firms (more pronounced in the latter), as well as for firms in central/eastern regions and high-tech industries, but not for western regions or non-high-tech firms. This study provides empirical evidence for theoretical and practical research on dual synergy and offers strategic insights for manufacturing firms to enhance competitiveness.

Key words: manufacturing firms, digital transformation, green transformation, dual synergy, firm performance