Digital transformation and the allocation of decision-making rights within business groups – Empirical evidence from China

Hefan Yang, Xilu Liu, Yao Meng, Baoyi Feng and Zhijun Chen

Journal of Business Research, 2024, vol. 179, issue C

Abstract: The widespread adoption of digital technologies has spurred many organizations to embark on digital transformation initiatives. This study explores the impact of digital transformation on the allocation of decision-making rights within business groups (BGs). Drawing upon an integrated framework informed by agency theory and decentralization theory, and utilizing a panel dataset comprising 15,358 firm-year observations spanning from 2011 to 2021, this study demonstrates that (a) digital transformation significantly inhibits the centralization of decision-making rights within BGs, (b) the effect of digital transformation on decision rights centralization is more pronounced in BGs grappling with high economic policy uncertainty and weak internal control, and (c) agency expense and agency efficiency of subsidiaries are two transmission mechanisms for the impact of digital transformation on the allocation of decision-making rights within BGs.

Keywords: Digital transformation; Business groups; Decision-making rights; Decision-making authority; Agency theory; Decentralization theory (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:jbrese:v:179:y:2024:i:c:s0148296324002194

DOI: 10.1016/j.jbusres.2024.114715

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