Business Environment and Enterprise Digital Transformation

The impact and mechanism of the business environment on the digital transformation of enterprises are empirically studied in this paper, which uses data from Chinese A-share listed companies from 2017 to 2021 as a sample. Based on the regional business environment score, a time-fixed effect model is constructed to examine the influence of the business environment on the digital transformation of enterprises. The empirical findings demonstrate that a favorable business environment has a substantial impact on the digital transformation of businesses. The mechanism of action for this effect is that business environment reform raises the bar for urban marketization, improves infrastructure, and fosters enterprise innovation. Subsequent analyses of heterogeneity revealed that the business environment had a greater impact on the digital transformation of enterprises in central and western areas, as well as in locations with larger levels of government participation and SOEs. The results can offer valuable perspectives for advancing the digital transformation of businesses and strengthening the reform of the business environment.