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Digital Transformation and Manufacturing Firm Performance: Evidence from China

Author

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  • Hongtao Wang

    (School of Economics and Management, Xi’an University of Posts and Telecommunications, Xi’an 710061, China)

  • Wencheng Cao

    (School of Economics and Management, Xi’an University of Posts and Telecommunications, Xi’an 710061, China)

  • Fei Wang

    (Business School, Xi’an International Studies University, Xi’an 710128, China)

Abstract

Based on the digital transformation practice of Chinese manufacturing enterprises, this paper sorts out the intrinsic mechanism of digital transformation affecting the performance of manufacturing enterprises systematically, based on the perspective of digital investment, and empirically tests the theoretical hypothesis using an unbalanced panel of China’s A-share listed manufacturing companies in Shanghai and Shenzhen from 2007 to 2020. The findings show that digital transformation enhances manufacturing firm performance significantly, and the conclusions still hold after using dynamic panel models, the instrumental variables approach, and a series of robustness tests; further analysis reveals that this effect is more significant in state-owned enterprises and manufacturing enterprises in regions with a higher degree of marketization. The results of the mediating effect model show that low-cost empowerment and innovation empowerment are important channels to improve the performance of manufacturing enterprises. Accordingly, this paper argues that accelerating the deep integration of digital technology and enterprise development is the key to achieving high-quality development and improving enterprise performance in the context of an uncertain business environment.

Suggested Citation

  • Hongtao Wang & Wencheng Cao & Fei Wang, 2022. "Digital Transformation and Manufacturing Firm Performance: Evidence from China," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:10212-:d:890621
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    References listed on IDEAS

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    Cited by:

    1. Chenyu Dai & Jianwen Fang, 2024. "Digital Transformation and Non-Financial Performance in Manufacturing," Sustainability, MDPI, vol. 16(12), pages 1-20, June.
    2. Qianqian Guo & Zhifang Su, 2023. "The Application of Industrial Robot and the High-Quality Development of Manufacturing Industry: From a Sustainability Perspective," Sustainability, MDPI, vol. 15(16), pages 1-26, August.
    3. Boqiang Lin & Yongjing Xie, 2024. "Impacts of digital transformation on corporate green technology innovation: Do board characteristics play a role?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1741-1755, May.
    4. Yang, Jun & Lv, Xinxin & Xu, Xiaohui & Chen, Xiaohua, 2024. "Heterogeneous treatment effects of digital transformation on firms' innovation: Based on BART method," Pacific-Basin Finance Journal, Elsevier, vol. 85(C).

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