Digital transformation and financial performance: the moderating role of entrepreneurs’ social capital

ABSTRACT

Current research on the relationship between digital transformation and financial performance (FP) remains inconclusive. This paper conceptualizes digital transformation as technology-based digital transformation (TDT) and market-based digital transformation (MDT), and explores their heterogeneous impacts on FP. It is further assessed how such distinctive effects are moderated by three types of entrepreneurs’ social capital, i.e. entrepreneurs’ technological social capital (ETSC), entrepreneurs’ business social capital (EBSC), and entrepreneurs’ institutional social capital (EISC). Using a carefully assembled dataset containing the relevant information of 2363 listed Chinese manufacturing firms covering the period of 2008–2018, these relationships are empirically examined, and the following is found: (1) TDT positively affects FP; (2) MDT has a time-lagged positive effect on FP; (3) ETSC positively moderates the relationship between MDT and FP; (4) EBSC positively moderates the impacts of TDT and MDT on FP. These findings enrich the understanding of the concept and application of digital transformation.

KEYWORDS:

• Technology-based digital transformation
• market-based digital transformation
• entrepreneurs’ social capital

Disclosure statement

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

Additional information

Funding

This research was supported by the National Natural Science Foundation of China under Grant 72102020; the Key Research and Cultivation Project of Beijing Information Science and Technology University under Grant 2021YJPY227; the Scientific Research Fund Project of Beijing Information Science and Technology University under Grant 2021XJJ39; the Scientific Research Project of Fuyang Normal University under Grant FSKFKT023D; the Undergraduate Innovation and Entrepreneurship Project of Beijing Municipal Education Commission under Grant 5112210833.

Notes on contributors

Huanyong Ji

Huanyong Ji, Ph.D. is an Associate Professor at the School of Economics and Management, Beijing Information Science and Technology University, China. His research focuses on technology policy, innovation management and broad sustainability, standing at the intersection of innovation and sustainability.

Zhongzhen Miao

Zhongzhen Miao, Ph.D. is an Assistant Professor at the School of Public Policy and Management, Tsinghua University. His research focuses on national and sectoral systems of innovation, as well as on innovation management, particularly in developing countries.

Jun Wan

Jun Wan, corresponding author of this paper, is a PhD candidate at the School of Economics and Management, Beijing University of Posts and Telecommunications, China. Her research focuses on innovation diffusion and digital transformation. E-mail: [email protected]

Lei Lin

Lei Lin is an undergraduate student at the School of Economics and Management, Beijing Information Science and Technology University. His research interests include digital technology adoption and innovation policies.