Digital Transformation, Financing Constraints, and Corporate Innovation Efficiency: Evidence from Chinese A-Share Listed Companies

Digital technologies are reshaping how firms allocate resources to innovation, yet whether digital transformation raises the efficiency with which innovation inputs are converted into outputs remains an open question. Using a panel of Chinese A-share listed companies over 2012–2023 and a two-way fixed effects specification, this study examines the effect of digital transformation on corporate innovation efficiency, measured by a data envelopment analysis (DEA) score built on R&D inputs and patent outputs. Complemented by heterogeneity analyses, a mediation examination and a battery of robustness tests, we uncover three main findings. First, digital transformation significantly improves corporate innovation efficiency, and the result survives alternative efficiency measures, lagged regressors, an instrumental-variable strategy, sub-period analysis and region-by-year fixed effects. Second, the effect is heterogeneous: it is substantially stronger for non-state-owned enterprises, for firms in high-technology industries and for small and medium-sized firms. Third, alleviating financing constraints is a significant mediating channel, accounting for roughly 18% of the total effect. These findings offer implications for firms evaluating the returns to digital investment and for policymakers designing differentiated support for digital transformation.