Impact of enterprise digital transformation on capacity utilization: Evidence from China

Abstract

Based on empirical analysis of Chinese listed companies from 2010 to 2018, we demonstrate that enterprise digital transformation has a significant impact on improving capacity utilization. Digital transformation is a significant driving force behind enterprise-specific production and innovation. Furthermore, enterprise innovation and enterprise-specialized production play a mediating role in the impact of enterprise digital transformation on capacity utilization. Based on these baseline findings, heterogenous analysis reveals that the impact of digital transformation on capacity utilization is significant for firms with larger capital scales or poor governance and manufacturing abilities. However, it is less important for enterprises with small- and medium-sized capital scales or with more standardized governance, as well as non-manufacturing (service) enterprises.