Upper echelons under uncertainty: how executive perceptions shape strategic digital investment

Purpose This study aims to examine how executives’ uncertainty perceptions shape firms’ strategic digital investment. While prior research has emphasized structural and skill-based executive antecedents, less is known about how executives’ subjective interpretations of uncertainty influence long-horizon digital commitments. Design/methodology/approach Using panel data from Chinese A-share listed firms (2013–2023), the authors construct a text-based measure of executive uncertainty perception (EUP) from MD&A narratives and operationalize strategic digital investment (SDI) as the proportion of digital-related intangible assets. The authors estimate fixed-effects models and triangulate identification using propensity score matching and an instrumental-variable strategy. The authors further test behavioral pathways through TMT risk-taking propensity, R&D intensity and financial leverage and examine heterogeneity across ownership and industry contexts. Finally, the authors assess economic consequences for short-term cash flow and long-term firm value. Findings EUP is positively associated with SDI. This relationship is consistently linked to higher TMT risk-taking propensity, while R&D intensity and lower financial leverage reflect broader organizational responses associated with strategic digital investment. The effect is stronger in private firms, low-concentration industries and nonmanufacturing sectors. SDI is associated with lower short-term cash flow but higher long-term firm value. Originality/value This study foregrounds executives’ cognitive uncertainty perceptions as a key antecedent of strategic digital investment. Conceptually, it integrates upper echelons theory with real options logic by treating real options as a valuation lens through which perceived uncertainty increases the attractiveness of flexibility-enhancing digital investments and clarifies how this valuation is enacted through observable organizational behaviors. Methodologically, it offers a scalable text-analytic approach to measuring executive perceptions from corporate disclosures.