Digital transformation, financing constraints and enterprise performance

Abstract

Purpose

The main purpose of this paper is to explore the impact of digital transformation on enterprises' performance considering financing constraints in the capital market to explore whether digital transformation improves enterprises' performance through the financing constraints channel.

Design/methodology/approach

This study, using a panel data set of 14,669 observations of 2,858 non-financial enterprises that issued A shares on the Shanghai and Shenzhen stock exchanges from 2013 to 2019, theoretically and empirically tests the impact and mechanism of digital transformation on enterprise performance.

Findings

Digital transformation has a significant positive effect on enterprise performance; this conclusion remains the same after the robustness test and endogeneity problems are dealt with. Financing constraints play a mediation role between digital transformation and enterprise innovation. The effect of digital transformation on enterprise performance varies significantly by size, ownership and industry.

Originality/value

The theoretical contributions of this study not only enrich the literature on the economic benefits and mechanism of digital transformation but also expand the literature on the factors that influence enterprise performance. The practical contribution of this study is the reference that it provides for implementing decisions about enterprise digital transformation and formulating differentiated policies for government digital transformation.

Citation

Liu, M., Li, H., Li, C. and Yan, Z. (2023), "Digital transformation, financing constraints and enterprise performance", European Journal of Innovation Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/EJIM-05-2023-0349