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Does social capital matter to firm digital transformation? Evidence from China

Author

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  • Nie, Jing
  • Zhang, Jiaming
  • Chang, Xue

Abstract

This study examines the relationship between social capital and firm digital transformation in China. We find that firms located in high social capital provinces, especially those with more advanced social networks, demonstrate a lower propensity for digital transformation. High social capital reduces digital transformation by decreasing managerial risk-taking. Further analysis indicates that social capital has a stronger impact on digital transformation among firms exhibiting high levels of over-investment and growth rate, along with non-state-owned entities. Moreover, the negative effect of social capital disappears after COVID-19. This paper contributes insights into the role social capital plays in determining firm development.

Suggested Citation

  • Nie, Jing & Zhang, Jiaming & Chang, Xue, 2024. "Does social capital matter to firm digital transformation? Evidence from China," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006664
    DOI: 10.1016/j.frl.2024.105636
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