Thriving Amid Turbulence: Economic Downturns and the Drivers of Enterprise Digital Transformation

Existing literature focuses on the positive effects of digital transformation of enterprises. However, few studies have examined whether enterprises have the motivation and ability to implement digital transformation in the current situation of increasing downward pressure on China's economy. Theoretically, on the one hand, in order to cope with the various challenges brought about by the economic downturn, enterprises have the motivation to implement digital transformation to cultivate internal strength, improve quality and increase efficiency. But on the other hand, under the pressure of economic downturn, enterprises need to invest more resources to cope with the challenges of external market changes; thus, even if enterprises have the motivation to digitally transform, they may be forced to slow down or even suspend digital transformation due to lack of corresponding resources. The empirical results support the theoretical expectation that enterprises will increase the degree of digital transformation in the context of economic downturn. The cross-sectional analysis identifies the prerequisites for digital transformation of enterprises in the context of economic downturn: transformation mainly occurs in enterprises with higher quality managers and more abundant resources. The economic consequence analysis proves the motivation for digital transformation of enterprises under the pressure of economic downturn: as the economy enters a downturn, increasing the degree of digital transformation can improve the financial performance and operational efficiency of enterprises. At a time when downward pressure on the economy is increasing, the research conclusions of this article not only provide evidence from micro-enterprises for the resilience of my country's economy but helps to recognize and understand the motivations and prerequisites for the digital transformation of enterprises, thus having certain implications for how to better promote and assist the digital transformation of enterprises.