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Political conformity and digital transformation: Evidence from China

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  • Yang, Haiyan
  • Chen, Linlin
  • Zhang, Yuyu

Abstract

This study investigates the influence of political conformity on digital transformation in Chinese family businesses from 2011 to 2020. We find that political conformity significantly boosts digital transformation by strengthening strategic leadership, technology focus, and organizational capabilities. It also fosters risk-taking, reduces agency costs, and eases financial constraints. The impact is more pronounced in situations in contexts with high economic policy uncertainty, when executives have limited IT knowledge, family members hold positions in the party committee, and the firm is geographically proximate to the political center, Beijing. Additionally, aligning political conformity with technology strategies not only advances digital transformation but also enhances the businesses' Environmental, Social, and Governance (ESG) profile and firm value.

Suggested Citation

  • Yang, Haiyan & Chen, Linlin & Zhang, Yuyu, 2024. "Political conformity and digital transformation: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1979-1997.
    • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:1979-1997
    DOI: 10.1016/j.eap.2024.11.014
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