Market competition and digital transformation in firms

Thithuha Nguyen, Ge Song, Shengkun Zhao and Congjiang Zuo

Finance Research Letters, 2025, vol. 73, issue C

Abstract: This paper examines the impact of market competition on firms' digital transformation. Using data from Chinese listed companies, we measure market competition at the firm-year level by analyzing product and service descriptions in annual reports. Results show that higher market competition increases the likelihood of digital transformation, driven by more digital patent inventions. Heterogeneity analysis reveals that the effect is more pronounced in non-state-owned firms and for firms in more market-oriented environments.

Keywords: Market competition; Digital transformation; Innovation; Machine Learning; Text Analysis (search for similar items in EconPapers)
JEL-codes: D22 L1 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324017136

DOI: 10.1016/j.frl.2024.106684

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