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Business model innovation and total factor productivity in the digital economy

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  • Yu, Chengluo

Abstract

In the digital economy era, business model innovation (BMI) has emerged as a vital driver of firm productivity. Using panel data from Chinese A-share listed firms spanning 2014–2023, this study examines the effect of BMI on total factor productivity (TFP) and the moderating role of digital transformation. The results show that BMI significantly enhances TFP, and digital transformation amplifies this positive effect. Further analysis identifies an inverted U-shaped relationship, indicating diminishing marginal returns to BMI at higher levels, with stronger effects in private and high-tech firms. These findings clarify how BMI influences productivity and highlight the enabling role of digital transformation. The study offers policy implications for fostering innovation and digital infrastructure to advance high-quality economic development.

Suggested Citation

  • Yu, Chengluo, 2025. "Business model innovation and total factor productivity in the digital economy," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325020367
    DOI: 10.1016/j.frl.2025.108782
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    References listed on IDEAS

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