Technical background of the top management team, digital innovation and firm performance: the evidence from construction firms

Purpose In the wave of Industry 4.0, construction firms face challenges in leveraging digital innovation to enhance performance. While the top management team (TMT) is central to strategic decision-making, the influence of the TMT’s technical background on digital innovation and firm outcomes remains underexplored. This study addresses this gap by examining how TMT technical background shapes different dimensions of digital innovation and their effects on firm performance. Design/methodology/approach Drawing upon the upper echelons theory, this study develops the research framework and hypotheses. Using data of 147 Chinese listed construction firms with 858 firm-year observations from 2015 to 2023 collected from the CSMAR financial database, the empirical analysis adopts a fixed-effects model to examine the relationships among TMT technical background, digital innovation (technological, process and business) and firm performance. Findings The results show that a TMT technical background significantly promotes digital innovation overall. From the dimensional perspective, it affects technological and business innovation, but not process innovation. Notably, only technological innovation mediates the relationship between TMT technical background and firm performance, highlighting the critical role of technology-driven transformation. Business innovation, while stimulated by technical background, does not translate directly into performance gains. Originality/value This study advances the understanding of digital innovation antecedents by highlighting the overlooked role of TMT technical background in construction firms. By distinguishing technical background from general digital skills, it provides new theoretical insight into how collective TMT cognition shapes digital innovation in the context of Industry 4.0. The findings also offer actionable guidance for practitioners on assembling technically skilled leadership teams to navigate Industry 4.0 and unlock digital innovation’s potential.