Driving corporate innovation through digital transformation: Evidence from China

This research investigates how digital transformation (DT) shapes corporate innovation, using data from 1620 Chinese A-share listed firms over the period 2011–2020. We employ the Digital Transformation Index from the CSMAR database, which captures dimensions including strategic leadership, technology application, organizational empowerment, and digital outcomes. Findings first show that DT significantly enhances firms’ innovation output by improving internal control quality, elevating information disclosure, and optimizing human capital structures. Second, strategic leadership and organizational empowerment notably play a more pivotal role in fostering innovation than does the technology-driven approach. Third, DT exerts a more pronounced positive impact in state-owned enterprises (SOEs), manufacturing firms, and high-tech enterprises. These findings deepen our understanding of the mechanisms through which DT propels innovation and offer practical insights for managers seeking to design effective digital strategies.