IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v45y2024i4p2321-2335.html

Digital transformation, external financing, and enterprise resource allocation efficiency

Author

Listed:
  • Yan Liu
  • Qiuju He

Abstract

In a highly informative society, digital transformation has become a new driving force to enhance enterprise competitiveness and promote high‐quality economic development. This paper examines the impact of digital transformation on firms' resource allocation efficiency using a sample of Chinese A‐share listed companies in the manufacturing industry from 2007 to 2019. The research findings are as follows: The digital transformation has significantly improved enterprise resource allocation efficiency. Mechanisms suggest that digital transformation enhances resource allocation efficiency by attracting external financing, both equity and debt financing. Furthermore, the contribution of digital transformation to enterprise resource allocation efficiency is more pronounced in the eastern region, high‐tech industries, and non‐state‐owned enterprises. This paper provides new evidence for exploring effective paths to improve resource allocation efficiency from the digital transformation perspective. It is significant for accelerating enterprise digital transformation and achieving cost reduction and efficiency enhancement.

Suggested Citation

  • Yan Liu & Qiuju He, 2024. "Digital transformation, external financing, and enterprise resource allocation efficiency," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2321-2335, June.
    • Handle: RePEc:wly:mgtdec:v:45:y:2024:i:4:p:2321-2335
    DOI: 10.1002/mde.4136
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.4136
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.4136?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
    ---><---

    References listed on IDEAS

    as
    1. Gus De Franco & S.P. Kothari & Rodrigo S. Verdi, 2011. "The Benefits of Financial Statement Comparability," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 49(4), pages 895-931, September.
    2. Su, Yingliang & Wu, Jiahua, 2024. "Digital transformation and enterprise sustainable development," Finance Research Letters, Elsevier, vol. 60(C).
    3. Diego Restuccia & Richard Rogerson, 2017. "The Causes and Costs of Misallocation," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    6. Chenery, Hollis B., 1984. "Economic Structure and Performance," Elsevier Monographs, Elsevier, edition 1, number 9780126800609 edited by Syrquin, Moshe & Taylor, Lance & Westphal, Larry E..
    7. Heitor Almeida & Murillo Campello, 2007. "Financial Constraints, Asset Tangibility, and Corporate Investment," The Review of Financial Studies, Society for Financial Studies, vol. 20(5), pages 1429-1460, 2007 12.
    8. Sheng, Yu & Xu, Xinpeng & Rozelle, Scott, 2024. "Market structure, resource allocation, and industry productivity growth: Firm-level evidence from China's steel industry," China Economic Review, Elsevier, vol. 83(C).
    9. Stefania Cosci & Valentina Meliciani & Valentina Sabato, 2016. "Relationship lending and innovation: empirical evidence on a sample of European firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(4), pages 335-357, June.
    10. Niu, Yuhao & Wen, Wen & Wang, Sai & Li, Sifei, 2023. "Breaking barriers to innovation: The power of digital transformation," Finance Research Letters, Elsevier, vol. 51(C).
    11. Yi Che & Lei Zhang, 2018. "Human Capital, Technology Adoption and Firm Performance: Impacts of China's Higher Education Expansion in the Late 1990s," Economic Journal, Royal Economic Society, vol. 128(614), pages 2282-2320, September.
    12. Clara Xiaoling Chen & Hai Lu & Theodore Sougiannis, 2012. "The Agency Problem, Corporate Governance, and the Asymmetrical Behavior of Selling, General, and Administrative Costs," Contemporary Accounting Research, John Wiley & Sons, vol. 29(1), pages 252-282, March.
    13. Daron Acemoglu & Pascual Restrepo, 2018. "The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment," American Economic Review, American Economic Association, vol. 108(6), pages 1488-1542, June.
    14. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    15. Wang, Yaozhong & He, Pinzhen, 2024. "Enterprise digital transformation, financial information disclosure and innovation efficiency," Finance Research Letters, Elsevier, vol. 59(C).
    16. Daron Acemoglu & Ufuk Akcigit & Harun Alp & Nicholas Bloom & William Kerr, 2018. "Innovation, Reallocation, and Growth," American Economic Review, American Economic Association, vol. 108(11), pages 3450-3491, November.
    17. Jiri Chod & Nikolaos Trichakis & Gerry Tsoukalas & Henry Aspegren & Mark Weber, 2020. "On the Financing Benefits of Supply Chain Transparency and Blockchain Adoption," Management Science, INFORMS, vol. 66(10), pages 4378-4396, October.
    18. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    19. Ghasemaghaei, Maryam & Calic, Goran, 2019. "Does big data enhance firm innovation competency? The mediating role of data-driven insights," Journal of Business Research, Elsevier, vol. 104(C), pages 69-84.
    20. Benmelech, Efraim & Frydman, Carola & Papanikolaou, Dimitris, 2019. "Financial frictions and employment during the Great Depression," Journal of Financial Economics, Elsevier, vol. 133(3), pages 541-563.
    21. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1403-1448.
    22. Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Anthony Bartzokas & Sunil Mani (ed.), Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2, Edward Elgar Publishing.
    23. Jensen, Michael C. & Meckling, William H., 2008. "Theory of the firm: managerial behavior, agency costs and ownership structure," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 48(2), April.
    24. Arthur Lewbel, 1997. "Constructing Instruments for Regressions with Measurement Error when no Additional Data are Available, with an Application to Patents and R&D," Econometrica, Econometric Society, vol. 65(5), pages 1201-1214, September.
    25. Jin, Hehui & Qian, Yingyi & Weingast, Barry R., 2005. "Regional decentralization and fiscal incentives: Federalism, Chinese style," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1719-1742, September.
    26. Ilona Ilvonen & Stefan Thalmann & Markus Manhart & Christian Sillaber, 2018. "Reconciling digital transformation and knowledge protection: a research agenda," Knowledge Management Research & Practice, Taylor & Francis Journals, vol. 16(2), pages 235-244, April.
    27. Tian, Meng & Chen, Yang & Tian, Guanghao & Huang, Wei & Hu, Chuan, 2023. "The role of digital transformation practices in the operations improvement in manufacturing firms: A practice-based view," International Journal of Production Economics, Elsevier, vol. 262(C).
    28. Li, Chengming & Huo, Peng & Wang, Zeyu & Zhang, Weiguang & Liang, Feiyan & Mardani, Abbas, 2023. "Digitalization generates equality? Enterprises’ digital transformation, financing constraints, and labor share in China," Journal of Business Research, Elsevier, vol. 163(C).
    29. Lee, Chien-Chiang & Zeng, Mingli & Luo, Kang, 2023. "Food security and digital economy in China: A pathway towards sustainable development," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1106-1125.
    30. Lee, Chien-Chiang & He, Zhi-Wen & Yuan, Zihao, 2023. "A pathway to sustainable development: Digitization and green productivity," Energy Economics, Elsevier, vol. 124(C).
    31. Charles I. Jones & Christopher Tonetti, 2020. "Nonrivalry and the Economics of Data," American Economic Review, American Economic Association, vol. 110(9), pages 2819-2858, September.
    32. Diego Restuccia & Richard Rogerson, 2013. "Misallocation and productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 1-10, January.
    33. Hongbin Huang & Yani Sun & Qingling Chu, 2021. "Can we-media information disclosure drive listed companies' innovation?—From the perspective of financing constraints," China Finance Review International, Emerald Group Publishing Limited, vol. 12(3), pages 477-495, April.
    34. Zhong, Rong (Irene), 2018. "Transparency and firm innovation," Journal of Accounting and Economics, Elsevier, vol. 66(1), pages 67-93.
    35. Tian, Guangning & Li, Bo & Cheng, Yue, 2022. "Does digital transformation matter for corporate risk-taking?," Finance Research Letters, Elsevier, vol. 49(C).
    36. Wang, Lan, 2023. "Digital transformation and total factor productivity," Finance Research Letters, Elsevier, vol. 58(PA).
    37. Lou, Zhaohui & Xie, Qizhuo & Shen, Jim Huangnan & Lee, Chien-Chiang, 2024. "Does Supply Chain Finance (SCF) alleviate funding constraints of SMEs? Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    38. Qiang Cheng & Kin Lo, 2006. "Insider Trading and Voluntary Disclosures," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 44(5), pages 815-848, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shouquan Xu & Ming Tian & Yujie Cai & Xuan Fu, 2025. "Natural Environmental Change and Firm Sustainable Development in China: The Moderating Effect of Slack Resources and Digital Transformation," Sustainability, MDPI, vol. 17(9), pages 1-33, May.
    2. Jun Li & Ying Wang & Shizhi Liang & Peng Zhou & Ao Zhang, 2025. "Does the National Big Data Comprehensive Experimental Zone Pilot Policy Effectively Promote the ESG Performance of Firms? Evidence From Listed Firms in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(5), pages 3106-3122, July.
    3. Gang Li & Chunlian Zhang & Ling Hu, 2025. "How Can Enterprise Digital Transformation Facilitate Internationalization?," SAGE Open, , vol. 15(3), pages 21582440251, July.
    4. Lu, Yingchao & Chang, Hailing & Zhou, Yadan, 2025. "The impact of consumer complaints on corporate digital transformation," International Review of Economics & Finance, Elsevier, vol. 101(C).
    5. Xiaoshi Chen & Xiaohui Xu, 2025. "Enterprise Digital Transformation and Carbon Emission Performance: The Moderating Role of Economic Policy Uncertainty," SAGE Open, , vol. 15(4), pages 21582440251, October.
    6. Cao, Peng & Huang, Rong, 2025. "How does media attention affect corporate credit asset allocation efficiency?," Finance Research Letters, Elsevier, vol. 75(C).
    7. Liao, Wenqi & Zhuo, Ling, 2025. "The impact of public data openness on corporate supply chain efficiency: A quasi-natural experiment based on a local government data openness platform," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1557-1574.
    8. Zhang, Zhanyu & Cao, Jingdong & Ma, Ruihao & Feng, Yiqiang, 2025. "Digital economy policies and corporate technology spillovers: A data-driven perspective," International Review of Economics & Finance, Elsevier, vol. 103(C).
    9. Zhao, Lang & Xu, Jiawei & Zhang, Baofeng & Lu, Jianjun, 2026. "Leveraging AI to enhance firms’ resource efficiency: ecological modernization theory and resource-based view perspectives," International Journal of Production Economics, Elsevier, vol. 291(C).
    10. Hong Zhang & Jiehua Liu & He Jiang, 2025. "The Impact of Enterprise Digital Transformation on ESG Performance: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(5), pages 3157-3171, July.
    11. Jing Xiao & Ping Zeng & Huafei Yan & Lanlan Niu, 2026. "Can digital transformation promote enterprise green innovation? Evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 28(4), pages 9065-9092, April.
    12. Cao, Linjun & Wu, Lidong, 2025. "Embracing paradox: The digital innovation strategy and corporate value—The moderating role of CEO-TMT cognitive complementarity and executive equity incentives," International Review of Financial Analysis, Elsevier, vol. 106(C).
    13. Jiang, Li & Li, Bin & Zhang, Min, 2025. "The impact of digital transformation on the efficiency of corporate resource allocation: Internal mechanisms and external environment," Technological Forecasting and Social Change, Elsevier, vol. 215(C).
    14. Jiang, Qian & Zhang, Chaoshuai & Wei, Qianqing, 2025. "Digital technology adoption and enterprise investment efficiency," Finance Research Letters, Elsevier, vol. 72(C).
    15. Maoguang Wang & Jianxiang Zhang & Xinzi Xia, 2026. "Building digital bridges: spillover effects of public infrastructure investment," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 16(1), pages 193-219, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Qinyang & Li, Mingrui & Li, Mengru & Li, Tao, 2025. "Digital ripples: The impact of customers' digital transformation on the financing constraints of suppliers," International Review of Financial Analysis, Elsevier, vol. 105(C).
    2. Niu, Yuhao & Wang, Sai & Wen, Wen & Li, Sifei, 2023. "Does digital transformation speed up dynamic capital structure adjustment? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    3. Wu, Weihong & Zhou, Hui & Huo, Zheng, 2025. "The effect of issuers’ digital transformation on bond rating quality: Evidence from China’s bond market," Research in International Business and Finance, Elsevier, vol. 79(C).
    4. Jiang, Weijie & Li, Jiaye, 2024. "Digital transformation and its effect on resource allocation efficiency and productivity in Chinese corporations," Technology in Society, Elsevier, vol. 78(C).
    5. repec:jaf:journl:v:14:y:2023:i:2:n:548 is not listed on IDEAS
    6. De Haas, Ralph & Guriev, Sergei & Stepanov, Alexander, 2025. "State ownership and corporate leverage around the world," Journal of Corporate Finance, Elsevier, vol. 93(C).
    7. Peng, Fei & Zhou, Shibiao & Zhou, Peng, 2023. "Local government fiscal stress and corporate risk-taking: Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1677-1695.
    8. Chen, Yenn-Ru & Jiang, Xiaoquan & Weng, Chia-Hsiang, 2020. "Can government industrial policy enhance corporate bidding? The evidence of China," Pacific-Basin Finance Journal, Elsevier, vol. 60(C).
    9. Xin Qu & Majella Percy & Fang Hu & Jenny Stewart, 2022. "Can CEO equity‐based compensation limit investment‐related agency problems?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2579-2614, June.
    10. Z. Jun Lin & Shengqiang Liu & Fangcheng Sun, 2017. "The Impact of Financing Constraints and Agency Costs on Corporate R&D Investment: Evidence from China," International Review of Finance, International Review of Finance Ltd., vol. 17(1), pages 3-42, March.
    11. Lee, Sanghoon, 2015. "Slack and innovation: Investigating the relationship in Korea," Journal of Business Research, Elsevier, vol. 68(9), pages 1895-1905.
    12. Söhnke M. Bartram, 2017. "Corporate Postretirement Benefit Plans and Real Investment," Management Science, INFORMS, vol. 63(2), pages 355-383, February.
    13. Ameer, Rashid, 2014. "Financial constraints and corporate investment in Asian countries," Journal of Asian Economics, Elsevier, vol. 33(C), pages 44-55.
    14. Ömer Tuğsal Doruk, 2024. "The Link Between R&D and Financing Constraints in Manufacturing Sectors for Two Emerging Markets," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 12596-12621, September.
    15. Annalisa Croce & José Martí, 2017. "Financial constraints in family firms and the role of venture capital," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(1), pages 119-144, March.
    16. Xu, Yuanbin & Wei, Yuan & Zeng, Xin & Yu, Haiqing & Chen, Hongjie, 2024. "Big data development and labor income share: Evidence from China's national big data comprehensive pilot zones," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1415-1437.
    17. Muhammad Kaleem Khan & Ahmad Kaleem & Salman Zulfiqar & Umair Akram, 2019. "Innovation Investment: Behaviour Of Chinese Firms Towards Financing Sources," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(07), pages 1-29, October.
    18. Friedemann Polzin & Helen Toxopeus & Erik Stam, 2018. "The wisdom of the crowd in funding: information heterogeneity and social networks of crowdfunders," Small Business Economics, Springer, vol. 50(2), pages 251-273, February.
    19. Wang, Jingwen & Shen, Guangjun & Tang, Dunzhe, 2021. "Does tax deduction relax financing constraints? Evidence from China's value-added tax reform," China Economic Review, Elsevier, vol. 67(C).
    20. Pham, Mia Hang & Merkoulova, Yulia & Veld, Chris, 2024. "Award-winning CEOs and corporate innovation," Journal of Banking & Finance, Elsevier, vol. 159(C).
    21. Michael Espindola Araki & Henrique Castro Martins, 2022. "Integrating uncertainty and governance into a capital structure puzzle: can risk-taking and rule-taking explain zero-leverage firms?," Review of Managerial Science, Springer, vol. 16(6), pages 1979-2034, August.

    More about this item

    Statistics

    Access and download statistics

    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:wly:mgtdec:v:45:y:2024:i:4:p:2321-2335. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    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.