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Can digital innovation improve firm performance: Evidence from digital patents of Chinese listed firms

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  • Huang, Qiongyu
  • Xu, Chuhong
  • Xue, Xiaolong
  • Zhu, Hui

Abstract

Within the context of the digital economy, digital innovation has emerged as a significance driving force to enhance firm value. This paper uses the A-share listed companies in Shanghai and Shenzhen from 2016 to 2021 as a sample to test the impact of digital innovation on corporate performance and its mechanism. We find that digital innovation can positively improve firm performance by improving labor productivity, reducing operating costs and enhancing competitive advantage. Further research shows that digital innovation is more likely to improve firm performance in high-market, large-scale, state-owned enterprises and regions with high marketization. Digital industrialization can strengthen the positive correlation between digital innovation and firm performance. Industries involved of digital product manufacturing and digital technology application play a greater role in the economic effect of digital innovation. Finally, location-oriented policies promote digital innovation. This paper contributes to the research on the measurement of digital innovation and its economic consequences, constructs a framework for the impact of digital innovation on the economic effect of microenterprises, and provides reliable empirical evidence for the development of digital innovation.

Suggested Citation

  • Huang, Qiongyu & Xu, Chuhong & Xue, Xiaolong & Zhu, Hui, 2023. "Can digital innovation improve firm performance: Evidence from digital patents of Chinese listed firms," International Review of Financial Analysis, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:finana:v:89:y:2023:i:c:s1057521923003265
    DOI: 10.1016/j.irfa.2023.102810
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    Cited by:

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    3. Yuan Feng & Ying Li & Changfei Nie, 2024. "Digital technology innovation and synergy of pollution control and carbon reduction: empirical evidence from digital patents in Chinese cities," Economic Change and Restructuring, Springer, vol. 57(6), pages 1-29, December.
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    6. Li, Haitong & Lu, Lanting & Lin, Ziang & Meng, Tianze, 2024. "Digital innovation and corporate social responsibility performance: Evidence from firms' digital patents," Technological Forecasting and Social Change, Elsevier, vol. 207(C).
    7. Yuan Feng & Changfei Nie, 2024. "Digital technology innovation and corporate environmental, social, and governance performance: Evidence from a sample of listed firms in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3836-3854, September.
    8. Zhang, Chenrui & Wang, Yatong, 2024. "Is enterprise digital transformation beneficial to shareholders? Insights from the cost of equity capital," International Review of Financial Analysis, Elsevier, vol. 92(C).
    9. Qi, Yudong & Han, Minmin & Zhang, Chao, 2024. "The Synergistic Effects of Digital Technology Application and ESG Performance on Corporate Performance," Finance Research Letters, Elsevier, vol. 61(C).
    10. Li, Wentao & Li, Xue & Peng, Lanying & Ning, Chong, 2024. "Silent actions: Digital transformation in private enterprises with state equity participation," Finance Research Letters, Elsevier, vol. 65(C).
    11. Sun, Yumeng, 2024. "Digital transformation and corporates' green technology innovation performance–The mediating role of knowledge sharing," Finance Research Letters, Elsevier, vol. 62(PA).

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