Digital Transformation and Manufacturing Firm Performance: Evidence from China

Hongtao Wang, Wencheng Cao () and Fei Wang
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Hongtao Wang: School of Economics and Management, Xi’an University of Posts and Telecommunications, Xi’an 710061, China
Wencheng Cao: School of Economics and Management, Xi’an University of Posts and Telecommunications, Xi’an 710061, China
Fei Wang: Business School, Xi’an International Studies University, Xi’an 710128, China

Sustainability, 2022, vol. 14, issue 16, 1-18

Abstract: Based on the digital transformation practice of Chinese manufacturing enterprises, this paper sorts out the intrinsic mechanism of digital transformation affecting the performance of manufacturing enterprises systematically, based on the perspective of digital investment, and empirically tests the theoretical hypothesis using an unbalanced panel of China’s A-share listed manufacturing companies in Shanghai and Shenzhen from 2007 to 2020. The findings show that digital transformation enhances manufacturing firm performance significantly, and the conclusions still hold after using dynamic panel models, the instrumental variables approach, and a series of robustness tests; further analysis reveals that this effect is more significant in state-owned enterprises and manufacturing enterprises in regions with a higher degree of marketization. The results of the mediating effect model show that low-cost empowerment and innovation empowerment are important channels to improve the performance of manufacturing enterprises. Accordingly, this paper argues that accelerating the deep integration of digital technology and enterprise development is the key to achieving high-quality development and improving enterprise performance in the context of an uncertain business environment.

Keywords: digital transformation; enterprise performance; digital investment; manufacturing enterprises; low-cost empowerment; innovation empowerment (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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