The power of competition: Unveiling China's digital transformation through product market dynamics

Jiaying Fan and Meiling Xu

Economics Letters, 2024, vol. 234, issue C

Abstract: This study investigates the non-linear relationship between product market competition (PMC) and digital transformation (DTF) in China's digital economy, utilizing data from a large sample of Chinese firms. The findings reveal a U-shaped relationship, wherein DTF initially decreases and then increases as competition intensifies. Furthermore, we examine the impact of financing constraints on this relationship and discover a negative effect on the “U-shaped” relationship. These results emphasize the necessity for companies to update their transformation strategies for sustained competitiveness and adaptability, providing fresh insights into digital transformation complexities in competitive environments.

Keywords: Product market competition; Digital transformation; Financing constraints; U-shaped (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:234:y:2024:i:c:s0165176523005050

DOI: 10.1016/j.econlet.2023.111479

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