Determinants of digital technology adoption and its impact on firm performance in manufacturing firms

Purpose This study aims to investigate the factors influencing digital technology adoption (DTA) and the impacts of these technologies on firm performance (FP) in Chinese manufacturing firms. Design/methodology/approach The study integrates the diffusion of innovations theory (DOI) and the technology-organization-environment (TOE) framework to construct a model for digital technology adoption and firm performance. The hypotheses were tested using data from 347 Chinese manufacturing firms, analyzed through partial least squares structural equation modeling. Findings The results indicated that relative advantage (RA), organizational readiness (OR), top management support (TMS), competitive pressure (CMP), regulatory support (RS) and trading partner influence (TPI) significantly and positively affected the firm’s digital technology adoption. Complexity (CME) had a significant negative influence on adoption, whereas compatibility (CMA) did not. The study also confirmed the positive impact of digital technology adoption on firm performance. Practical implications The findings offer valuable insights for government policymakers and industry practitioners. Policymakers can use these results to develop supportive regulations, while managers can craft effective strategies to facilitate digital technology adoption and optimize firm performance. Originality/value By integrating the DOI theory and the TOE framework, this study elucidates the key factors influencing digital technology adoption in Chinese manufacturing and confirms that better integration of appropriate technologies enhances firm performance.