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Exploring the effect of digital transformation on firm resilience: Evidence from China

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  • Xu, Yaozhi
  • Xu, Liling
  • Shen, Yaxin
  • Fan, Zhigang

Abstract

Digital transformation has become a new driving force for the high-quality development of China's economy, and is also an important pivot point to safeguard the development of enterprises and promote the recovery of industries in an uncertain environment. In this paper, we apply textual analysis to measure the digital transformation index using the data of listed companies in China and explore the impact of digital transformation on corporate resilience. The results, which are based on a robustness test and endogeneity test, lead to the conclusion that digital transformation can have a significantly positive impact on enterprise resilience. Mechanism analysis finds that enterprise green innovation and total factor productivity (TFP) are important channels through which digital transformation significantly affects a firm’s resilience. Heterogeneity analysis further shows that the effect is more pronounced among state-owned enterprises (SOE), non-high-tech enterprises, labor-intensive enterprises and technology-intensive enterprises. These findings will help guide policies that promote digital transformation in order to resist the negative effects of external shocks.

Suggested Citation

  • Xu, Yaozhi & Xu, Liling & Shen, Yaxin & Fan, Zhigang, 2024. "Exploring the effect of digital transformation on firm resilience: Evidence from China," Journal of Asian Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:asieco:v:95:y:2024:i:c:s1049007824001076
    DOI: 10.1016/j.asieco.2024.101812
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