Can Process Digitization Improve Firm Innovation Performance? Process Digitization as Job Resources and Demands

Abstract

Process digitization as a means to enhance innovation performance has garnered increasing attention from researchers and firms. Digital-driven innovation helps businesses achieve sustainable development. Following the job demands–resources model, we argue that process digitization contributes to job resources and job demands simultaneously, both of which are related to innovation performance. Process digitization offers additional job resources that contribute to enhanced work engagement and foster innovation performance at lower levels, whereas increasing job demands results in exhaustion and hinders innovation performance at higher levels. Therefore, we propose that firms with moderate levels of process digitization are more likely to have higher innovation performance. We further propose that employee training and pay can buffer the negative impact of process digitization on innovation performance. Training serves as an ex ante measure that enables knowledge-based employees to effectively respond to job demands without becoming exhausted. Conversely, pay serves as an ex post measure that compensates for resource depletion caused by excessive job demands, thereby alleviating the adverse effect of exhaustion on innovation performance. Our empirical results based on data from 3823 Chinese firms strongly support our hypotheses.