Sectoral heterogeneity in the digital transformation–financial performance nexus: evidence from Korean manufacturing firms

This study examines how digital transformation (DT) influences the financial performance of Korean manufacturing firms, focusing on sectoral heterogeneity. Using firm-level data from the Korean Innovation Survey 2022, covering 1,476 firms between 2019 and 2021, we estimated weighted linear regression models to assess the impact of digital technologies and digital intensity (DGI) on financial performance across Pavitt’s sectors. Both data analysis (DA) technologies and DGI are positively associated with financial performance across the entire sample. Sector-level analysis revealed substantial heterogeneity, with scale-intensive and science-based firms benefiting most from robot manufacturing within the DA domain. Our findings address the scope of digitalisation that firms must adopt, shifting focus beyond the binary of adopting DT: returns emerged only at the DA layer, not at the earlier stages of adoption. As DA technologies such as robot manufacturing are physically embedded in production, they pay off only when implemented within core production tasks, either substituting for human labour or fundamentally restructuring them. These findings indicate that the financial value of DT depends on the sectoral regime and firm capabilities that shape how digital technologies are leveraged, thereby extending the dynamic capabilities perspective by identifying Pavitt’s taxonomy as an important boundary condition.