The Transformative Impact of Digital Innovation on Chinese Firms: Blessing or Burden?

Abstract

This study explores the impact of digital transformation (DT) on firm performance, highlighting the ‘digital paradox’, where technological advancements yield mixed results. Using empirical analysis, we assess the relationship between DT, intangible assets, total factor productivity (TFP) and firm performance. Findings reveal that while digital transformation enhances intangible assets and TFP, it reduces overall firm performance. However, China’s ‘Internet Plus strategy’, introduced in 2014, has a lasting positive impact on TFP. We offer fresh insights into the dual nature of digital transformation, emphasising the need for strategic adaptations to balance innovation, productivity growth and overall firm success.