Performance feedback and enterprise digital transformation

ABSTRACT

This study draws on the behavioural theory of the firm to examine the impact of performance feedback on enterprise digital transformation. We develop a set of hypotheses and empirically test them using panel data of Chinese A-share listed firms from 21 to 2019. The fixed-effects panel data models serve as an estimation technique. Empirical results show that as performance falls below aspiration, the degree of enterprise digital transformation first increases and then decreases, as performance rises above aspiration, the degree of enterprise digital transformation first decreases and then increases. That is, there is an inverted U-shaped relationship between negative performance feedback and enterprise digital transformation and a U-shaped relationship between positive performance feedback and enterprise digital transformation. Moreover, CEO openness significantly intensifies digital transformation in response to negative performance feedback, and industrial digitalization positively moderates the effects of positive performance feedback on digital transformation. Our findings highlight the importance of performance feedback on enterprise digital transformation, not only theoretically contributes to the research on digital transformation and behavioural theory, but also have notable implications for practice.

KEYWORDS:

• Negative performance feedback
• positive performance feedback
• digital transformation
• CEO openness
• industrial digitalization

JEL CLASSIFICATION:

• L25
• L19

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

We appreciate the financial support from the China National Natural Science Foundation (no.71972076), the Humanities and Social Sciences Youth Fund of Ministry of Education of China (no. 20YJC630115) and the Fund for the Development of Philosophy and Social Sciences in Guangzhou (no. 2019GZGJ73).