Enterprise digital transformation and inefficient investment: from the perspective of diversified operations and environmental uncertainty

Ziqian Peng, Haiyang Zhang, Peng Zhou, Junlin Ren () and Yanbai Chen
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Ziqian Peng: Hubei University of Technology
Haiyang Zhang: Hubei University of Technology
Peng Zhou: China MCC5 Group Corp. Ltd.
Junlin Ren: Wuhan Textile University
Yanbai Chen: Hubei University of Technology

Palgrave Communications, 2025, vol. 12, issue 1, 1-16

Abstract: Abstract Amid escalating economic complexity, can digital transformation address persistent corporate investment inefficiencies? Utilizing data from Shanghai and Shenzhen A-share listed companies during 2012–2023, this study examines how digital transformation influences inefficient investment under the dual pressures of operational diversification and environmental uncertainty. We employ a corporate digital transformation index evaluation system encompassing strategic guidance, technological enablement, organizational empowerment, environmental support, digital achievements and applications, and also ensure research reliability through neural network language models and Python crawlers. Empirical results demonstrate that digital transformation significantly inhibits inefficient investment, effectively mitigating both underinvestment and overinvestment. This inhibitory effect intensifies in firms with higher diversification levels and those operating in stable environments. Mechanism analysis identifies three key channels: improving internal governance, reducing information asymmetry, and alleviating financing constraints. Cross-sectional heterogeneity reveals more pronounced effects in high-tech firms, large enterprises, and companies in China’s economically advanced eastern and central regions. Our findings systematically clarify digital technology’s governance applications while providing actionable insights for optimizing corporate investment efficiency.

Date: 2025
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DOI: 10.1057/s41599-025-05591-4

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