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Unlocking the impact of digital technology progress and entry dynamics on firm's total factor productivity in Chinese industries

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  • Pan, Junyu
  • Cifuentes-Faura, Javier
  • Zhao, Xin
  • Liu, Xiaoqian

Abstract

In today's digital era, technology serves as a fundamental pillar of the digital economy, greatly transforming business models and re-evaluating the enterprises' worth. This theoretical study incorporates digital technology factors into a task-based model to discuss the impact of digital technology advancement and entry price on corporate total factor productivity (TFP) using 2008–2021 data from Chinese-listed companies. The findings show that advances in digital technology considerably help in improving corporate TFP. According to digital technology's pricing strategy, a decrease in the entry price is essential to advancing digital technology and improving TFP. An improvement in corporate management and operational capabilities contributes to incorporating digital technologies at a lower price, thus enhancing corporate TFP. In addition, digital technology advancement generates a heterogeneous TFP effect, which is highlighted in regions with well-protected intellectual property rights, enterprises with high-tech certifications, and nonstate enterprises. These findings demonstrate the empowering effect of emerging technologies on high-quality corporate development and provide strategic insights for companies to achieve digital transformation.

Suggested Citation

  • Pan, Junyu & Cifuentes-Faura, Javier & Zhao, Xin & Liu, Xiaoqian, 2024. "Unlocking the impact of digital technology progress and entry dynamics on firm's total factor productivity in Chinese industries," Global Finance Journal, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:glofin:v:60:y:2024:i:c:s1044028324000292
    DOI: 10.1016/j.gfj.2024.100957
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    Keywords

    Digital technology; Entry price; Total factor productivity; Task-based model; Management capability; Operational capability;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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