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Breaking barriers to innovation: The power of digital transformation

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  • Niu, Yuhao
  • Wen, Wen
  • Wang, Sai
  • Li, Sifei

Abstract

This study analyzes the impact of digital transformation on corporate innovation. Based on a sample of Chinese listed companies during 2007-2019, we find that digital transformation has a positive impact on corporate innovation. Mechanism tests show that digital transformation helps alleviate corporate financial constraints and improve corporate governance, thus breaks barriers to corporate innovation. Heterogeneity analysis reveals that the positive impact of digital transformation on corporate innovation is more pronounced in high-tech industries and in industries with more intense competition. These findings enrich the growing literature on the economic consequences of digital transformation and have policy implications for promoting corporate innovation.

Suggested Citation

  • Niu, Yuhao & Wen, Wen & Wang, Sai & Li, Sifei, 2023. "Breaking barriers to innovation: The power of digital transformation," Finance Research Letters, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finlet:v:51:y:2023:i:c:s154461232200633x
    DOI: 10.1016/j.frl.2022.103457
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    References listed on IDEAS

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    Cited by:

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    2. Bogdan Rusu & Christiana Brigitte Sandu & Silvia Avasilcai & Irina David, 2023. "Acceptance of Digital Transformation: Evidence from Romania," Sustainability, MDPI, vol. 15(21), pages 1-17, October.
    3. Changling Sun & Ziang Lin & Marek Vochozka & Zuzana Vincúrová, 2022. "Digital transformation and corporate cash holdings in China’s A-share listed companies," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1081-1116, December.
    4. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).
    5. Mihaela Brindusa Tudose & Amalia Georgescu & Silvia Avasilcăi, 2023. "Global Analysis Regarding the Impact of Digital Transformation on Macroeconomic Outcomes," Sustainability, MDPI, vol. 15(5), pages 1-21, March.
    6. Zhang, Wenqiu & Zhao, Junli, 2023. "Digital transformation, environmental disclosure, and environmental performance: An examination based on listed companies in heavy-pollution industries in China," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 505-518.
    7. Jiajia Liu & Kexin Zhou & Ye Zhang & Fangcheng Tang, 2023. "The Effect of Financial Digital Transformation on Financial Performance: The Intermediary Effect of Information Symmetry and Operating Costs," Sustainability, MDPI, vol. 15(6), pages 1-22, March.
    8. Li, Rui & Xu, Shoufu & Zhang, Yun, 2023. "Can digital transformation reduce within-firm pay inequality? Evidence from China," Economic Modelling, Elsevier, vol. 129(C).
    9. Luo, Yonggen & Cui, Huijie & Zhong, Huiyi & Wei, Changhua, 2023. "Business environment and enterprise digital transformation," Finance Research Letters, Elsevier, vol. 57(C).
    10. Yan, Lina & Ling, Xuan & Wang, Zhitao & Xu, Yinuo, 2023. "Can mixed-ownership reform boost the digital transformation of state-owned enterprises?," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 647-663.
    11. Li, Shibin & Wang, Qian, 2023. "Green finance policy and digital transformation of heavily polluting firms: Evidence from China," Finance Research Letters, Elsevier, vol. 55(PA).
    12. Zheng, Lei, 2023. "Heterogeneous impacts of financial inclusion on enterprise innovation: Evidence from China," Finance Research Letters, Elsevier, vol. 55(PB).
    13. Lipeng Sun & Nur Ashikin Mohd Saat, 2023. "How Does Intelligent Manufacturing Affect the ESG Performance of Manufacturing Firms? Evidence from China," Sustainability, MDPI, vol. 15(4), pages 1-20, February.

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    More about this item

    Keywords

    Digital transformation; Corporate innovation; Financial constraints; Corporate governance; Industry heterogeneity;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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