How digital transformation shapes the performance of manufacturing firms: a study of China

Purpose This study examines how digital transformation affects the operational performance of Chinese manufacturing firms, with a focus on multidimensional impact mechanisms. Design/methodology/approach Using the “Technology-Organization-External Network” framework, we analyze a dataset from 2,346 listed Chinese manufacturing firms (2011–2021) to empirically test the impact of digital transformation on operational performance. Findings Digital transformation significantly improves manufacturing enterprises’ performance by enhancing innovation effectiveness, boosting labor productivity, increasing organizational management efficiency, reducing supply chain dependence and strengthening capital market recognition. The transformation’s effect evolves from negative to positive over time, emphasizing the need for sustained investment. Originality/value This study innovatively proposes the “Technology-Organization-External Network” framework to reveal the multidimensional mechanisms. It further validates the long-term benefits of digital transformation and highlights the importance of external conditions such as digital infrastructure, financial development and industry competition intensity.