The Impact of IT Penetration on Employee Stability: Evidence from China

While reshaping the production methods and business models of enterprises, information technology (IT) has also brought great challenges to enterprise management. Will the use of enterprise IT with high skill requirements have an impact on the stability of their employees? Will this impact be transmitted through the corporate governance level and the fairness of employee compensation and be impacted by factor intensity and employee position. And it subsequently has a negative impact on the enterprise? To answer these questions, this study investigates the impact of firm IT penetration on employee stability based on data of Chinese A-share listed companies from 2013 to 2022. First, this research finds a negative association between firm IT penetration and employee stability. Second, the penetration of firm IT affects the corporate governance level and the fairness of employee compensation, leading to changes in employee stability. Third, IT penetration has a significantly negative impact on employee stability in labor-intensive enterprises and among executives. Forth, the decline in employee stability brought about by corporate IT penetration has a negative impact on corporate risk-bearing capacity. This study contributes to theory and practice by deepening the understanding of firm IT investment and use in the context of enterprise IT governance and enterprise stability.