Digital transformation and firm performance: a case study on China’s listed companies in 2009–2020

Abstract

Abstract Based on a panel fixed effect model, our paper explores the impact of digital transformation on the operation efficiency of Chinese A-share listed enterprises during 2009–2020. It conducts related robustness tests, mechanism analysis, and heterogeneity analysis to provide a comprehensive understanding of the intrinsic relationship between digitalization and firm performance. The empirical findings demonstrate that digital transformation has a significantly positive effect on firm performance. More specifically, rising digital transformation of enterprises leads to an improvement in their operation efficiency. The research further reveals that digital transformation mainly promotes the efficiency of capital-labor allocation, which in turn enhances firm performance. Overall, our study adds to the existing literature by offering empirical evidence on the relationship between digital transformation and enterprise operation efficiency, providing valuable insights for practitioners and policymakers.