The impact of firms’ digital transformation and relationship network status on capacity utilization: evidence from listed manufacturing companies in China

Purpose This study aims to investigate the impact of corporate DT on CU under different relational network interventions and their underlying mechanisms. It further examines the synergistic effects of corporate digitalization and relational network status on CU, proposing policy and management implications for effectively leveraging the digital economy’s enabling power and resolving China's overcapacity issues. Effectively addressing the issue of excess production capacity is a crucial strategy for China to boost economic growth and overcome challenges in development. It is also essential to achieving the “double carbon” target and promoting high-quality economic development within the specified timeframe. Digital transformation (DT) brings production mode optimization and accurate supply and demand matching, which may become an essential driving force for addressing overcapacity and high-quality development as the digital economy evolves. Still, there is a need for a more in-depth study of corporate DT’s micro routes and network conditions, which affect capacity utilization (CU). Design/methodology/approach This study examines the influence of corporate DT and the status of corporate connection networks on CU at the micro-firm level using fixed-effects modeling and instrumental variable testing. The data used for this analysis is from Shanghai and Shenzhen A-share listed manufacturing companies in China, covering the period from 2008 to 2022. Findings The study discovered that enterprise DT does not significantly contribute to CU in social relationship networks. However, enterprise DT and green technology association networks significantly improve enterprise CU, and this conclusion remains unchanged after a series of robustness and endogeneity tests. The mechanism test reveals that technical innovation, scale economy and factor allocation impacts are essential channels for corporate digitalization and its green technology-related network to increase enterprise CU. Heterogeneity analysis reveals that the impact of enterprise DT and its green technology association network on enterprise CU is stronger in state-owned enterprises, large-scale enterprises and technology-intensive enterprises. Furthermore, there are clear synergies and mutual reinforcement between enterprise digitalization and green technology networks for increasing CU. Originality/value This study introduces corporate relationship networks into the study of corporate DT and CU analysis, which enriches and expands the related research on the economic effects of corporate DT, and provides new ideas for addressing overcapacity at the micro level. This paper also complements related studies on the synergistic effects of digital and green technologies, demonstrating that the synergistic effects of enterprise digitalization and green technology relational networks can promote enterprise CU.