Digital transformation and cost stickiness: a perspective based on resource allocation and agency costs

Purpose The purpose of this study is to examine the impact of digital transformation (DT) on cost stickiness in listed Chinese companies from the perspectives of resource allocation efficiency and agency cost. Design/methodology/approach In this paper, the authors employ the text mining method to extract three categories of keywords related to DT from company annual reports: digital underlying technology, digital infrastructure construction and digital technology application. This study incorporates DT indicators into traditional cost stickiness models and explores the mechanism of DT from the perspectives of resource allocation and agency costs. Findings This paper reveals that cost stickiness is a common issue among listed Chinese companies, and implementing DT can significantly reduce cost stickiness. Additionally, DT can lower cost stickiness by improving resource allocation efficiency and mitigating agency problems. Comparatively, mature companies, those with lower business complexity, non-high-tech companies and companies in economically developed eastern regions show a more significant reduction in cost stickiness by implementing DT. Originality/value This study segments the dimensions of DT and analyzes the mechanism through which DT reduces cost stickiness from resource allocation efficiency and agency cost. This paper provides empirical evidence and insights into strategic and cost management considerations regarding corporate DT.