IDEAS home Printed from https://ideas.repec.org/a/eee/teinso/v81y2025ics0160791x24003555.html
   My bibliography  Save this article

Audit quality and digitalisation in shaping firm innovation strategy: Evidence from China

Author

Listed:
  • Luan, Fushu
  • Zhang, Zhonghui
  • Chen, Yang

Abstract

This study explores how external auditor quality and internal corporate digitalisation influenced the innovation performance of Chinese listed companies from 2001 to 2021. Innovation is assessed across three dimensions: efficiency, technological impact and economic value. The findings reveal a nuanced relationship: while high-quality audits enhance financial transparency and encourage structured innovation, they can unintentionally stifle high-risk, high-reward technological breakthroughs. Digitalisation amplifies these dynamics, driving data-informed decision-making and operational efficiency but, at times, reinforcing cautious innovation strategies. Further, the interplay between audit quality and digitalisation is shaped by internal factors, such as firm ownership, and external influences, including local enforcement of intellectual property rights and industry competition. These contextual elements amplify or mitigate the effects on innovation outcomes. The study highlights the critical need to balance the benefits of audit rigour and digital transformation with the flexibility required for disruptive innovations. By shedding light on these dynamics, this study offers actionable insights for auditors, corporate leaders and policymakers, aiming to foster an innovation ecosystem that combines financial accountability with bold technological advancements.

Suggested Citation

  • Luan, Fushu & Zhang, Zhonghui & Chen, Yang, 2025. "Audit quality and digitalisation in shaping firm innovation strategy: Evidence from China," Technology in Society, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:teinso:v:81:y:2025:i:c:s0160791x24003555
    DOI: 10.1016/j.techsoc.2024.102807
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0160791X24003555
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techsoc.2024.102807?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:teinso:v:81:y:2025:i:c:s0160791x24003555. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/technology-in-society .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.