How do CEOs' general managerial skills affect firms' digital transformation? The contingent roles of performance feedback and financial slack

Purpose Executives play a key role in firms’ digital transformation, but extant literature remains unclear about the role of the CEO’s general managerial skills. This study aims to investigate the impact of CEOs' general managerial skills on firms’ digital transformation. Design/methodology/approach Drawing on upper echelons theory and the behavioral theory of the firm (BTOF), this study integrates insights from the CEO’s general managerial skills, i.e. a form of decision-makers’ cognitive bias, and its interactions with different types of behavioral heuristics including performance feedback and financial slack in the strategic decision of firms’ digital transformation. Employing a panel dataset of China’s A-share listed firms from 2007 to 2023, we conduct empirical research by using standard two-way fixed effects regressions. Findings We find that CEOs’ general managerial skills have a positive impact on firms’ digital transformation, in which there are three mechanisms including digital cognition, risk-taking and coordination mechanisms. Furthermore, we offer a contingent framework based on the perspective of BTOF. We find that performance shortfalls strengthen the positive impact of CEOs’ general managerial skills on firms’ digital transformation, while performance surplus and financial slack weaken this impact. Originality/value This study expands the literature on the driver of firms’ digital transformation by investigating the impact of CEOs’ general managerial skills on firms’ digital transformation and helps to understand firms’ digital transformation decisions more comprehensively from the perspective of CEOs’ previous experience. We offer new insight into digital transformation by emphasizing the interaction impacts of the CEO’s general managerial skills and firms’ performance feedback and financial slack.