Audit quality and digitalisation in shaping firm innovation strategy: Evidence from China

Fushu Luan, Zhonghui Zhang and Yang Chen

Technology in Society, 2025, vol. 81, issue C

Abstract: This study explores how external auditor quality and internal corporate digitalisation influenced the innovation performance of Chinese listed companies from 2001 to 2021. Innovation is assessed across three dimensions: efficiency, technological impact and economic value. The findings reveal a nuanced relationship: while high-quality audits enhance financial transparency and encourage structured innovation, they can unintentionally stifle high-risk, high-reward technological breakthroughs. Digitalisation amplifies these dynamics, driving data-informed decision-making and operational efficiency but, at times, reinforcing cautious innovation strategies. Further, the interplay between audit quality and digitalisation is shaped by internal factors, such as firm ownership, and external influences, including local enforcement of intellectual property rights and industry competition. These contextual elements amplify or mitigate the effects on innovation outcomes. The study highlights the critical need to balance the benefits of audit rigour and digital transformation with the flexibility required for disruptive innovations. By shedding light on these dynamics, this study offers actionable insights for auditors, corporate leaders and policymakers, aiming to foster an innovation ecosystem that combines financial accountability with bold technological advancements.

Keywords: Audit oversight; Corporate digitalisation; Innovation efficiency; Economic value; Intellectual property rights enforcement (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0160791X24003555
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:teinso:v:81:y:2025:i:c:s0160791x24003555

DOI: 10.1016/j.techsoc.2024.102807

Access Statistics for this article

Technology in Society is currently edited by Charla Griffy-Brown

More articles in Technology in Society from Elsevier
Bibliographic data for series maintained by Catherine Liu ().