The Alchemy of Digital Transformation: How Computing Power Investment Fuels New Quality Productivity

Against the backdrop of China’s “East-West Computing Resource Transfer” and “Digital-Real Integration” national strategies, computing power has emerged as a core engine driving the digital economy. However, existing research lacks in-depth exploration of the micro-level mechanisms through which computing power operates as a strategic digital resource at the firm level and transforms into competitive advantages. This study examines a sample of manufacturing firms listed on China’s A-share markets from 2011 to 2022, treating the establishment of intelligent computing centers by firms as a quasi-natural experiment. Employing a staggered difference-in-differences model combined with causal inference strategies such as double machine learning, we empirically test the impact of computing power investment on firms’ new quality productivity. The findings reveal that computing power investment significantly enhances new quality productivity, primarily through enabling dynamic capabilities: it strengthens risk perception capabilities by improving information environments, enabling intelligent risk monitoring, and enhancing decision-making resilience; it elevates innovation opportunity-capturing capabilities by expanding the scope of innovation search, accelerating innovation iteration, and facilitating cross-domain knowledge integration; and it achieves data element reconstruction through constructing data infrastructure capabilities, improving data operational efficiency, and optimizing data ecosystem collaboration. Further analysis demonstrates that this promotional effect is more pronounced in firms with strong executive digital cognition and intense market competition, and is more significant among non-heavily polluting, high-tech firms with high absorptive capacity, those located in eastern regions, and those with superior digital endowments. Extended analysis also reveals that the new quality productivity gains from computing power investment drive optimal allocation of human capital while potentially inducing strategic information concealment behaviors as firms seek to protect competitive advantages. By conceptualizing computing power as a contestable strategic resource at the micro level, this study unveils the micro-mechanisms of digital transformation through a dynamic capability framework, offering important implications for firms and governments in optimizing digital strategies.