Journal of Innovation & Knowledge (Apr 2024)

Digital transformation's impact on innovation in private enterprises: Evidence from China

  • Li Chen,
  • Ruixiang Tu,
  • BoXuan Huang,
  • Haiyan Zhou,
  • Yumei Wu

Journal volume & issue
Vol. 9, no. 2
p. 100491

Abstract

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In the digital economy era, the pathways of digital transformation and intelligent development have emerged as crucial avenues for enterprises’ high-quality development. Focusing on listed private enterprises from 2011 to 2020, this study uses text mining to extract keywords related to digital transformation, as disclosed in annual reports. We construct a digital transformation index and empirically examine its impact on enterprise innovation and innovation incentive policies’ synergistic effects. The results demonstrate that digital transformation significantly promotes innovation in private enterprises, with a more pronounced catalytic effect in economically developed regions characterised by higher levels of the digital economy and larger enterprises. Simultaneously, innovation incentive policies play a crucial role in enhancing digital transformation's impact on innovation in private enterprises. Further investigation reveals that digital transformation's impact mechanism on private enterprise innovation is driven primarily by four paths—specifically improving information transparency, reducing operational risks, alleviating financing constraints, and enhancing total factor productivity. This study provides empirical evidence regarding innovation breakthroughs and driving paths for private enterprises to achieve high-quality development as well as valuable references and insights for policy formulation.

Keywords