IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v57y2023ics1544612323006037.html
   My bibliography  Save this article

Digital transformation and firms' total factor productivity: The role of internal control quality

Author

Listed:
  • Zhang, Haiyan
  • Dong, Shizheng

Abstract

This paper examines the effects of digital transformation on firms' total factor productivity (TFP) and its underlying mechanisms using panel data from Chinese A-share listed companies between 2013 and 2021. By employing panel regression and mediation effect models, our findings demonstrate that digital transformation significantly enhances a firm's TFP. Furthermore, we reveal that digital transformation fosters TFP growth by enhancing the quality of internal control. This article offers novel insights into the mechanistic pathways through which digital transformation influences firm productivity.

Suggested Citation

  • Zhang, Haiyan & Dong, Shizheng, 2023. "Digital transformation and firms' total factor productivity: The role of internal control quality," Finance Research Letters, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323006037
    DOI: 10.1016/j.frl.2023.104231
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323006037
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104231?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Eller, Robert & Alford, Philip & Kallmünzer, Andreas & Peters, Mike, 2020. "Antecedents, consequences, and challenges of small and medium-sized enterprise digitalization," Journal of Business Research, Elsevier, vol. 112(C), pages 119-127.
    2. Bart van Ark, 2016. "The Productivity Paradox of the New Digital Economy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 31, pages 3-18, Fall.
    3. Dongmin Kong & Boyang Liu, 2023. "Digital Technology and Corporate Social Responsibility: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(9), pages 2967-2993, July.
    4. Kohtamäki, Marko & Parida, Vinit & Patel, Pankaj C. & Gebauer, Heiko, 2020. "The relationship between digitalization and servitization: The role of servitization in capturing the financial potential of digitalization," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    5. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    6. Pan, Wenrong & Xie, Tao & Wang, Zhuwang & Ma, Lisha, 2022. "Digital economy: An innovation driver for total factor productivity," Journal of Business Research, Elsevier, vol. 139(C), pages 303-311.
    7. Alsufyani, Nujud & Gill, Asif Qumer, 2022. "Digitalisation performance assessment: A systematic review," Technology in Society, Elsevier, vol. 68(C).
    8. Shang, Yuping & Raza, Syed Ali & Huo, Zhe & Shahzad, Umer & Zhao, Xin, 2023. "Does enterprise digital transformation contribute to the carbon emission reduction? Micro-level evidence from China," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 1-13.
    9. Ling Zhu & Dongmin Kong, 2023. "Revenue pressure of local governments and firm productivity: Evidence from a natural experiment in China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(3), pages 721-748, July.
    10. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    11. Cheng, Yiran & Zhou, Xiaorui & Li, Yongjian, 2023. "The effect of digital transformation on real economy enterprises’ total factor productivity," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 488-501.
    12. Wen, Huwei & Wen, Changyong & Lee, Chien-Chiang, 2022. "Impact of digitalization and environmental regulation on total factor productivity," Information Economics and Policy, Elsevier, vol. 61(C).
    13. Truant, Elisa & Broccardo, Laura & Dana, Léo-Paul, 2021. "Digitalisation boosts company performance: an overview of Italian listed companies," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhao, Zhihui & Liu, Wei & Ning, Yiyi & Yang, Shiyu, 2024. "Can China go green through digitalization? Evidence from China's listed firms," International Review of Economics & Finance, Elsevier, vol. 94(C).
    2. Zhai, Shaoxuan & Liu, Zhenpeng, 2023. "Artificial intelligence technology innovation and firm productivity: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    3. Liu, Yuya & Mai, Sheng, 2024. "The evaluation of innovation ability of China's information technology application innovation enterprises based on cloud modeling," Finance Research Letters, Elsevier, vol. 60(C).
    4. Ryota Nakatani, 2024. "Multifactor productivity growth enhancers across industries and countries: firm-level evidence," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(2), pages 401-446, June.
    5. Zheng, Deyuan & Song, Hang & Zhao, Chunguang & Liu, Yujiao & Zhao, Wenhao, 2024. "Is it possible for semiconductor companies to reduce carbon emissions through digital transformation? Evidence from China," International Journal of Production Economics, Elsevier, vol. 272(C).
    6. Guo, Borui & Huang, Xiaoxia, 2024. "Digital transformation tone signal and the cost of equity: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 59(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuan, Sai & Zhou, Ran & Li, Mengna & Lv, Chengchao, 2023. "Investigating the influence of digital technology application on employee compensation," Technological Forecasting and Social Change, Elsevier, vol. 195(C).
    2. Zhiqiang Zhou & Wenyan Liu & Pengfei Cheng & Zhenjin Li, 2022. "The Impact of the Digital Economy on Enterprise Sustainable Development and Its Spatial-Temporal Evolution: An Empirical Analysis Based on Urban Panel Data in China," Sustainability, MDPI, vol. 14(19), pages 1-23, September.
    3. Zhao, Shuang & Zhang, Liqun & Peng, Lin & Zhou, Haiyan & Hu, Feng, 2024. "Enterprise pollution reduction through digital transformation? Evidence from Chinese manufacturing enterprises," Technology in Society, Elsevier, vol. 77(C).
    4. Lu, Shan & Peng, Sihan & Shi, Jiaxin & Zhang, Ci & Feng, Yanchao, 2024. "How does digital transformation affect the total factor productivity of China's A-share listed enterprises in the mineral resource-based sector?," Resources Policy, Elsevier, vol. 94(C).
    5. Xiang Cheng & Xiaohui Chen, 2024. "The digital economy and power consumption: empirical analysis based on consumption intensity in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 19755-19777, August.
    6. Schubert, Torben & Ashouri, Sajad & Deschryvere, Matthias & Jäger, Angela & Visentin, Fabiana & Cunningham, Scott & Hajikhani, Arash & Pukelis, Lukas & Suominen, Arho, 2023. "The role of product digitization for productivity," MERIT Working Papers 2023-004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Guo, Xiaochuan & Li, Mengmeng & Wang, Yanlin & Mardani, Abbas, 2023. "Does digital transformation improve the firm’s performance? From the perspective of digitalization paradox and managerial myopia," Journal of Business Research, Elsevier, vol. 163(C).
    8. Lin, Boqiang & Zhang, Aoxiang, 2024. "Impact of government subsidies on total factor productivity of energy storage enterprises under dual-carbon targets," Energy Policy, Elsevier, vol. 187(C).
    9. Ensar Yılmaz & Zeynep Kaplan, 2022. "Heterogeneity of market power: firm-level evidence," Economic Change and Restructuring, Springer, vol. 55(2), pages 1207-1228, May.
    10. Massimo Colombo & Annalisa Croce & Samuele Murtinu, 2014. "Ownership structure, horizontal agency costs and the performance of high-tech entrepreneurial firms," Small Business Economics, Springer, vol. 42(2), pages 265-282, February.
    11. Ioannis Bournakis & Mike Tsionas, 2024. "A Non‐parametric Estimation of Productivity with Idiosyncratic and Aggregate Shocks: The Role of Research and Development (R&D) and Corporate Tax," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(3), pages 641-671, June.
    12. Nikita Céspedes & María E. Aquije & Alan Sánchez & Rafael Vera Tudela, 2016. "Productividad sectorial en el Perú: un análisis a nivel de firmas," Chapters of Books, in: Nikita Céspedes & Pablo Lavado & Nelson Ramírez Rondán (ed.), Productividad en el Perú: medición, determinantes e implicancias, edition 1, volume 1, chapter 3, pages 70-92, Fondo Editorial, Universidad del Pacífico.
    13. Guo, Shu & Zhang, ZhongXiang, 2023. "Green credit policy and total factor productivity: Evidence from Chinese listed companies," Energy Economics, Elsevier, vol. 128(C).
    14. Zhu, Ling & Liu, Shasha & Kong, Dongmin, 2023. "Governments' fiscal stress and firm decentralization," International Review of Financial Analysis, Elsevier, vol. 90(C).
    15. Li, Linjie & Liu, Xiaming & Yuan, Dong & Yu, Miaojie, 2017. "Does outward FDI generate higher productivity for emerging economy MNEs? – Micro-level evidence from Chinese manufacturing firms," International Business Review, Elsevier, vol. 26(5), pages 839-854.
    16. Zhaohui Yan & Mingli Wang & Yumeng Sun & Zihui Nan, 2023. "The Impact of Research and Development Investment on Total Factor Productivity of Animal Husbandry Enterprises: Evidence from Listed Companies in China," Agriculture, MDPI, vol. 13(9), pages 1-21, September.
    17. Amit Gandhi & Salvador Navarro & David Rivers, 2011. "On the Identification of Production Functions: How Heterogeneous is Productivity?," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20119, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    18. David Greenaway & Alessandra Guariglia & Zhihong Yu, 2014. "The more the better? Foreign ownership and corporate performance in China," The European Journal of Finance, Taylor & Francis Journals, vol. 20(7-9), pages 681-702, September.
    19. Andrey Stoyanov & Nikolay Zubanov, 2012. "Productivity Spillovers across Firms through Worker Mobility," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 168-198, April.
    20. Chen, Zhiyuan & Li, Yong & Zhang, Jie, 2016. "The bank–firm relationship: Helping or grabbing?," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 385-403.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323006037. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.