Can the digital economy enhance enterprises' breakthrough innovation?

Teng Qin, Chuan Qin, Jiaxin Wang and Haiyan Xing

International Review of Financial Analysis, 2025, vol. 104, issue PA

Abstract: Despite the growing recognition of digital transformation's significance, empirical evidence remains limited on how advancements in the digital economy (DE) specifically influence breakthrough innovation (INNOVT), particularly in the presence of organizational moderating factors. This study examines these relationships while exploring the moderating roles of managerial empowerment (MGM) and organizational resilience (OR). Using a comprehensive dataset of Chinese A-share listed firms from 2007 to 2021, we construct a composite digital economy index and employ multiple econometric approaches, including baseline regression, instrumental variable analysis, propensity score matching, and the Heckman correction method. Our empirical findings reveal that the DE significantly enhances INNOVT by improving resource accessibility, reducing constraints, and fostering connectivity. Moreover, MGM amplifies this effect by optimizing resource allocation and cultivating an experimental culture, whereas OR strengthens innovation outcomes by enabling firms to adapt to disruptions and sustain their focus on innovation. Heterogeneity analyses further indicate that ownership structure, technological intensity, and organizational lifecycle significantly influence these relationships. This research contributes to resource-based and dynamic capabilities theoretical frameworks by demonstrating how organizational characteristics convert digital potential into innovation outcomes. The findings provide actionable insights for business leaders seeking to maximize innovation returns from digital investments.

Keywords: Digital economy; Breakthrough innovation; Managerial empowerment; Organizational resilience; Dynamic capability (search for similar items in EconPapers)
JEL-codes: L25 M15 O31 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003564

DOI: 10.1016/j.irfa.2025.104269

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