Does enterprise digital transformation promote technological innovation? Empirical evidence from China
Abstract
Purpose
This study aims to test the link between enterprise digital transformation and technological innovation and the mechanisms and channels behind this link.
Design/methodology/approach
This study systematically examines whether and how enterprise digital transformation affects technological innovation in China.
Findings
Enterprise digital transformation effectively improves technological innovation. This result remains stable in robustness and endogeneity checks. The channel mechanisms of this promoting effect are internal (improvement of internal control quality and alleviation of agency costs) and external (increased attention of analysts and reduction of customer concentration). Moreover, this promoting effect is more significant for state-owned enterprises, small and medium-sized enterprises, enterprises in areas with low marketization and enterprises that do not enjoy digital subsidies from the government.
Social implications
Enterprises need to attend to the mechanisms behind the link between digital transformation and technological innovation and to the unique effects of different enterprise attributes and capital markets, such as size, the ownership nature, the degree of regional marketization and government subsidies. Doing so will effectively promote digital transformation and technological innovation and strengthen core competitiveness.
Originality/value
This study provides systemic evidence of the link between enterprise digital transformation and technological innovation. The findings enrich the research literature on enterprise digitization and the factors of influencing enterprises’ technological innovation and provide a reasonable explanation for how enterprise digital transformation affects technological innovation.
Keywords
Acknowledgements
Funding: This work was supported by the high-level talent project of Hainan Natural Science Foundation (grant number 720RC579).
Data availability statement: The data that support the findings of this study are available from China Stock Market and Accounting Research Database (CSMAR) and Chinese Research Data Services Platform (CNRDS). Restrictions apply to the availability of these data, which were used under license for this study. Data are available at www.gtadata.com, www.cnrds.com with the permission of CSMAR database and CNRDS platform, respectively.
Conflict of interest statement: All named authors, Xiuqun Hu, Xiulei Weng and Ziwei He, declare that they have no potential conflict of interest.
Citation
Hu, X., Weng, X. and He, Z. (2023), "Does enterprise digital transformation promote technological innovation? Empirical evidence from China", Chinese Management Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/CMS-12-2022-0471
Publisher
:Emerald Publishing Limited
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