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Does increased digital transformation promote a firm's financial performance? New insights from the quantile approach

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  • Vu, Dung Anh
  • Van Nguyen, Thinh
  • Nhu, Quang Minh
  • Tran, Tuyen Quang

Abstract

When studying how digital transformation affects company performance, a phenomenon known as the "digitalization paradox" frequently emerges. In previous studies, however, an average estimate has often been used to assess the relationship between digital transformation and firm performance. Using a fixed-effects quantile technique, this study examines the heterogeneous effect of digital transformation on firm performance in Vietnam. The findings reveal a nuanced relationship, indicating that only high-performing companies gain from digital transformation while others do not. The extensive robustness tests in the empirical analysis support this result. It becomes clear that the mean approach may hide the genuine consequences of digital transformation on firm performance.

Suggested Citation

  • Vu, Dung Anh & Van Nguyen, Thinh & Nhu, Quang Minh & Tran, Tuyen Quang, 2024. "Does increased digital transformation promote a firm's financial performance? New insights from the quantile approach," Finance Research Letters, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324004604
    DOI: 10.1016/j.frl.2024.105430
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    References listed on IDEAS

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    More about this item

    Keywords

    Digital transformation; Financial performance; Fixed effect quantile regression; Vietnam;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing

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