Digital Transformation and Enterprise Total Factor Productivity - Empirical Evidence from Chinese Listed Companies

Abstract

Accelerating the promotion of digital transformation of enterprises is the only way to achieve high-quality economic development in China. This paper uses the method of machine learning to measure the digitalization level of enterprises, and uses the A-share data of listed companies from 2011 to 2018 to examine the impact of digital transformation on the total factor productivity of enterprises and its mechanism. The study found that digital transformation significantly improved the total factor productivity of enterprises, and after passing instrumental variables and a series of robustness tests, the basic conclusions remained robust. The results of the mechanism analysis show that digital transformation mainly improves the total factor productivity of enterprises through the effect of cost saving and technological innovation. The research in this paper not only reveals the impact mechanism of digital transformation on the total factor productivity of enterprises, but also provides micro-evidence for the integrated development of the digital economy and the real economy. The research conclusions have important policies for the formulation of digitalization-related policies and high-quality economic development revelation.