IT-experienced executives and digital-physical integration: An internal capabilities perspective

The integration of digital technologies with traditional physical processes has become a cornerstone for firms pursuing high-quality development in the digital economy. However, the internal managerial determinants of this integration remain underexplored. Drawing on a panel dataset of 11,357 firm-year observations from Chinese A-share listed firms between 2012 and 2022, this study investigates whether and how executives with information technology backgrounds influence the integration of digital and physical technologies at the firm level. We employ fixed-effects regression models and instrumental variable approaches to establish a causal relationship, and construct a multi-dimensional measure of DPI using patent data, annual reports, and digital transformation disclosures. The findings reveal that executives with IT experience significantly promote digital-physical technology integration. This effect is mediated by two critical internal mechanisms: internal control quality and dynamic capabilities. Specifically, IT-experienced executives improve firms’ ability to manage risk and reconfigure resources, thereby enhancing the conditions for digital innovation to be realized. Further analyses demonstrate that the positive effect is more pronounced in state-owned enterprises, non-high-tech sectors, and firms where the CEO and chairman roles are consolidated. Robustness checks with alternative measures, placebo tests, and sub-sample regressions confirm the validity of our results. These findings enrich the literature on digital transformation by uncovering the internal capability perspective of executive influence and provide actionable insights for firms seeking to align leadership structures with digital strategy objectives.