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The Impact of Digital Transformation on Enterprise Capacity Utilization Under the Background of “Dual Circulation”

Author

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  • Lijun Ran

    (Beijing Technology and Business University)

  • Kang Wang

    (Beijing Technology and Business University)

  • Qi Zhang

    (Beijing Technology and Business University)

Abstract

Does digital transformation of enterprises enhance their capacity utilization? Existing research has not yet reached a consensus. This study examines the impact of digital transformation on capacity utilization and its underlying mechanisms using a sample of Chinese listed companies from 2000 to 2022. It employs the stochastic frontier analysis method to measure the capacity utilization of enterprises. The results are as follows: (1) Digital transformation (DT) can significantly enhance the capacity utilization of enterprises (ECU). The conclusion remains valid after a series of robustness tests. (2) DT enhances ECU by optimizing resource allocation, alleviating financing constraints, promoting innovation, and stimulating market demand. (3) Heterogeneity analysis reveals that DT has a more pronounced effect on ECU in regions with lower levels of marketization, higher levels of information infrastructure, and in the manufacturing sector. The research findings enrich the existing literature on the relationship between DT and ECU. They provide valuable insights for governments in optimizing digital policies for enterprises and addressing issues related to excess capacity.

Suggested Citation

  • Lijun Ran & Kang Wang & Qi Zhang, 2025. "The Impact of Digital Transformation on Enterprise Capacity Utilization Under the Background of “Dual Circulation”," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(1), pages 3481-3506, March.
    • Handle: RePEc:spr:jknowl:v:16:y:2025:i:1:d:10.1007_s13132-024-02092-8
    DOI: 10.1007/s13132-024-02092-8
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