Can MNEs achieve performance through digital business strategy in China’s institutional environment?

Few details are known regarding the timing and means by which multinational enterprises (MNEs) doing business in China can attain performance via digital business strategies. This study addresses this gap by exploring how digital business strategy affects enterprise performance in light of organizational learning. A theoretical model was empirically tested using hierarchical regression analysis and two-stage data from 305 MNEs. The findings showed that implementing a digital business strategy significantly enhances MNEs’ performance, with exploitative and exploratory learning as key mediators. The formal institutional distance adversely affects the connection between digital business strategy and both forms of learning, whereas informal institutional distance enhances this relationship. Consequently, MNEs should strive to mitigate the potential adverse effects of highly coercive formal institutional environments and leverage the flexible and dynamic nature of informal institutional environments to maximize the proactive role of digital business strategy in boosting performance. This paper aids in the research on digital business strategy and offers practical insights for MNEs in designing and implementing effective digital strategy.