IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v85y2023icp488-501.html
   My bibliography  Save this article

The effect of digital transformation on real economy enterprises’ total factor productivity

Author

Listed:
  • Cheng, Yiran
  • Zhou, Xiaorui
  • Li, Yongjian

Abstract

The digital transformation of real economy enterprises is essential for optimizing resource allocation, improving operation efficiency, and realizing high-quality innovation and development. Using the data of listed companies from 2007 to 2020, this study empirically explores the impact mechanism of the advancement of real economy enterprises' digital transformation on total factor productivity (TFP). The results reveal a positive nonlinear U-shaped relationship, demonstrating that real economy enterprises' TFP is reduced at the initial stage of digital transformation, then improves after exceeding a critical threshold value. Real economy enterprises' digital transformation impacts TFP through working capital turnover rate, human capital structure, and financing constraints. The heterogeneity analysis results indicate that the impact of advancing real economy enterprises' digital transformation on TFP is not affected by the size of enterprises' assets or enterprises' ownership. The research results provide direct evidence of the effect of real economy enterprises’ digital transformation on TFP at the microlevel, providing policy insights for the high-quality development of real economy enterprises.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:reveco:v:85:y:2023:i:c:p:488-501
    DOI: 10.1016/j.iref.2023.02.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S105905602300045X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2023.02.007?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. Guariglia, Alessandra & Liu, Xiaoxuan & Song, Lina, 2011. "Internal finance and growth: Microeconometric evidence on Chinese firms," Journal of Development Economics, Elsevier, vol. 96(1), pages 79-94, September.
    2. Fleisher, Belton & Li, Haizheng & Zhao, Min Qiang, 2010. "Human capital, economic growth, and regional inequality in China," Journal of Development Economics, Elsevier, vol. 92(2), pages 215-231, July.
    3. Chou, Yen-Chun & Hao-Chun Chuang, Howard & Shao, Benjamin B.M., 2014. "The impacts of information technology on total factor productivity: A look at externalities and innovations," International Journal of Production Economics, Elsevier, vol. 158(C), pages 290-299.
    4. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    5. Luo, Yu & Peng, Yuchao & Zeng, Lianyun, 2021. "Digital financial capability and entrepreneurial performance," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 55-74.
    6. V. E. Dementiev, 2021. "The value chain facing the challenges of digitalization and the economic downturn," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 3.
    7. 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.
    8. Guoyan Zeng & Linxing Lei & Ahmed Farouk, 2021. "Digital Transformation and Corporate Total Factor Productivity: Empirical Evidence Based on Listed Enterprises," Discrete Dynamics in Nature and Society, Hindawi, vol. 2021, pages 1-6, July.
    9. Ahmadova, Gozal & Delgado-Márquez, Blanca L. & Pedauga, Luis E. & Leyva-de la Hiz, Dante I., 2022. "Too good to be true: The inverted U-shaped relationship between home-country digitalization and environmental performance," Ecological Economics, Elsevier, vol. 196(C).
    10. Seunghyun Kim & Byungchul Choi & Yong Kyu Lew, 2021. "Where Is the Age of Digitalization Heading? The Meaning, Characteristics, and Implications of Contemporary Digital Transformation," Sustainability, MDPI, vol. 13(16), pages 1-20, August.
    11. Su, Chi-Wei & Yuan, Xi & Umar, Muhammad & Lobonţ, Oana-Ramona, 2022. "Does technological innovation bring destruction or creation to the labor market?," Technology in Society, Elsevier, vol. 68(C).
    12. Li, Dongkun & Chen, Yufeng & Miao, Jiafeng, 2022. "Does ICT create a new driving force for manufacturing?—Evidence from Chinese manufacturing firms," Telecommunications Policy, Elsevier, vol. 46(1).
    13. Wei Zhang & Siqi Zhao & Xiaoyu Wan & Yuan Yao, 2021. "Study on the effect of digital economy on high-quality economic development in China," PLOS ONE, Public Library of Science, vol. 16(9), pages 1-27, September.
    14. Yangjun Ren & Xin Zhang & Hui Chen, 2022. "The Impact of New Energy Enterprises’ Digital Transformation on Their Total Factor Productivity: Empirical Evidence from China," Sustainability, MDPI, vol. 14(21), pages 1-17, October.
    15. Lang, Larry & Ofek, Eli & Stulz, Rene M., 1996. "Leverage, investment, and firm growth," Journal of Financial Economics, Elsevier, vol. 40(1), pages 3-29, January.
    16. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
    17. Wang, Mei & Xu, Mi & Ma, Shaojun, 2021. "The effect of the spatial heterogeneity of human capital structure on regional green total factor productivity," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 427-441.
    18. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    19. Haihua Liu & Peng Wang & Zejun Li, 2021. "Is There Any Difference in the Impact of Digital Transformation on the Quantity and Efficiency of Enterprise Technological Innovation? Taking China’s Agricultural Listed Companies as an Example," Sustainability, MDPI, vol. 13(23), pages 1-19, November.
    20. Mahmood Hajli & Julian M. Sims & Valisher Ibragimov, 2015. "Information technology (IT) productivity paradox in the 21st century," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 64(4), pages 457-478, April.
    21. Dengler, Katharina & Matthes, Britta, 2018. "The impacts of digital transformation on the labour market: Substitution potentials of occupations in Germany," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 304-316.
    22. Jin, Canyang & Xu, Aiting & Zhu, Yuhan & Li, Jinchang, 2023. "Technology growth in the digital age: Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    23. Hongnan Liu & Weili Liu & Guangchun Chen, 2022. "Environmental Information Disclosure, Digital Transformation, and Total Factor Productivity: Evidence from Chinese Heavy Polluting Listed Companies," IJERPH, MDPI, vol. 19(15), pages 1-20, August.
    24. Zhang, Dongyang & Liu, Deqiang, 2017. "Determinants of the capital structure of Chinese non-listed enterprises: Is TFP efficient?," Economic Systems, Elsevier, vol. 41(2), pages 179-202.
    25. Mahmood Hajli & Julian M. Sims & Valisher Ibragimov, 2015. "Information technology (IT) productivity paradox in the 21st century," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 64(4), pages 457-478, April.
    26. Vu, Khuong & Hartley, Kris, 2022. "Effects of digital transformation on electricity sector growth and productivity: A study of thirteen industrialized economies," Utilities Policy, Elsevier, vol. 74(C).
    27. Steven Dhondt & Peter R.A. Oeij & Frank D. Pot, 2021. "Digital transformation of work: spillover effects of workplace innovation on social innovation," Chapters, in: Jürgen Howaldt & Christoph Kaletka & Antonius Schröder (ed.), A Research Agenda for Social Innovation, chapter 6, pages 99-113, Edward Elgar Publishing.
    28. Lei Shen & Xi Zhang & Hongda Liu, 2022. "Digital technology adoption, digital dynamic capability, and digital transformation performance of textile industry: Moderating role of digital innovation orientation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2038-2054, September.
    Full references (including those not matched with items on IDEAS)

    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. Fu, Shuke & Ge, Yingchen & Hao, Yu & Peng, Jiachao & Tian, Jiali, 2024. "Energy supply chain efficiency in the digital era: Evidence from China's listed companies," Energy Economics, Elsevier, vol. 134(C).
    3. Li, Chengming & Huo, Peng & Wang, Zeyu & Zhang, Weiguang & Liang, Feiyan & Mardani, Abbas, 2023. "Digitalization generates equality? Enterprises’ digital transformation, financing constraints, and labor share in China," Journal of Business Research, Elsevier, vol. 163(C).
    4. Guoen Xia & Zenghui Yu & Xuwu Peng, 2023. "How Does Enterprise Digital Transformation Affect Total Factor Productivity? Based on the Information Intermediary Role of Analysts’ Attention," Sustainability, MDPI, vol. 15(11), pages 1-22, May.
    5. Zhang, Yimeng & Ma, Xinyu & Pang, Jianing & Xing, Hailong & Wang, Jian, 2023. "The impact of digital transformation of manufacturing on corporate performance — The mediating effect of business model innovation and the moderating effect of innovation capability," Research in International Business and Finance, Elsevier, vol. 64(C).
    6. Liu, Fengzhong & Liu, Xing, 2024. "Digital transformation is not a painless change:Evidence from corporate risk," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    7. Nor-Eddine Oumansour & M'ssiyah Sakhr, 2024. "Innovation and employment: Estimation on a panel of countries using the software Stata," French Stata Users' Group Meetings 2024 34, Stata Users Group.
    8. Liu, Shasha & Wu, Yuhuan & Kong, Gaowen, 2024. "Politics and Robots," International Review of Financial Analysis, Elsevier, vol. 91(C).
    9. Sai Ding & Alessandra Guariglia & John Knight & Junhong Yang, 2021. "Negative Investment in China: Financing Constraints and Restructuring versus Growth," Economic Development and Cultural Change, University of Chicago Press, vol. 69(4), pages 1411-1449.
    10. 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.
    11. Hua Zhang & Qiwang Zhang, 2023. "How Does Digital Transformation Facilitate Enterprise Total Factor Productivity? The Multiple Mediators of Supplier Concentration and Customer Concentration," Sustainability, MDPI, vol. 15(3), pages 1-18, January.
    12. Zhang, Dongyang, 2020. "How do firms overcome financial constraint anxiety to survive in the market? Evidence from large manufacturing data," International Review of Financial Analysis, Elsevier, vol. 70(C).
    13. Feng, Wei & Sun, Shujun & Yuan, Hang, 2023. "Research on the efficiency of factor allocation in the pilot free trade zones," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 727-745.
    14. Sai Ding & John Knight & Xiao Zhang, 2019. "Does China overinvest? Evidence from a panel of Chinese firms," The European Journal of Finance, Taylor & Francis Journals, vol. 25(6), pages 489-507, April.
    15. Ning Ding & Kalimullah Bhat & Khalil Jebran, 2020. "Debt choice, growth opportunities and corporate investment: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-22, December.
    16. Fedorets Alexandra & Kirchner Stefan & Adriaans Jule & Giering Oliver, 2022. "Data on Digital Transformation in the German Socio-Economic Panel," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 242(5-6), pages 691-705, December.
    17. Robert Huggins & Hiro Izushi, 2013. "Knowledge-based Development in Leading Regions across the Globe: An Exploratory Analysis of the co-Evolution of Resources, Capabilities and Outputs," Urban Studies, Urban Studies Journal Limited, vol. 50(5), pages 1030-1048, April.
    18. Nadeem, Kashif & Wong, Sut I. & Za, Stefano & Venditti, Michelina, 2024. "Digital transformation and industry 4.0 employees: Empirical evidence from top digital nations," Technology in Society, Elsevier, vol. 76(C).
    19. Xiaoxue Liu & Fuzhen Cao & Shuangshuang Fan, 2022. "Does Human Capital Matter for China’s Green Growth?—Examination Based on Econometric Model and Machine Learning Methods," IJERPH, MDPI, vol. 19(18), pages 1-27, September.
    20. Krenz, Astrid & Prettner, Klaus & Strulik, Holger, 2021. "Robots, reshoring, and the lot of low-skilled workers," European Economic Review, Elsevier, vol. 136(C).

    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:reveco:v:85:y:2023:i:c:p:488-501. 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/inca/620165 .

    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.