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Catalyzing re-innovation: How digital transformation drives recovery from technological failure in manufacturing

Author

Listed:
  • Zhang, Yang
  • Yang, Xuan
  • Xu, Xuanxuan
  • Wan, Jun

Abstract

The negative perception of technological innovation failure often inhibits enterprises' willingness to pursue subsequent innovation initiatives. Fortunately, with the deepening development of digital technologies, enterprises can through digital transformation (DT) to mitigate biases toward technological innovation failures, helping them assess the outcomes of such failures more objectively and restore confidence in subsequent innovation. DT has now evolved into a critical turning point for enterprises seeking subsequent innovation breakthroughs after technological innovation failures. Therefore, based on data from Chinese manufacturing listed enterprises, this study employs empirical research methods to examine how DT influences two distinct re-innovation behaviors—incremental innovation and novel innovation—following technological innovation failures. Our findings reveal that DT significantly enhances both types of re-innovation behaviors through two primary mechanisms: optimizing the allocation efficiency of technological innovation resources (including R&D investments and personnel allocation) and mitigating enterprises information asymmetry. Furthermore, institutional investors demonstrate a dual moderating effect, exhibiting negative moderation between DT and incremental innovation, while positively moderating the relationship between DT and novel innovation following innovation failures. These insights provide both theoretical foundations and practical guidance for enterprises seeking to leverage DT for post-failure innovation recovery strategies.

Suggested Citation

  • Zhang, Yang & Yang, Xuan & Xu, Xuanxuan & Wan, Jun, 2026. "Catalyzing re-innovation: How digital transformation drives recovery from technological failure in manufacturing," Journal of Retailing and Consumer Services, Elsevier, vol. 89(PA).
    • Handle: RePEc:eee:joreco:v:89:y:2026:i:pa:s096969892500390x
    DOI: 10.1016/j.jretconser.2025.104611
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