Digital technology adoption and the latecomer firms’ catch-up: an empirical study on Chinese manufacturing enterprises

ABSTRACT

Digital technology has a significant influence on future economic growth. Achieving catch-up in the context of digital development is crucial for firms. However, the mechanisms between firms’ digital technology adoption (DTA) and catch-up are underexplored. Based on panel data of A-share listed manufacturing firms in China from 2012 to 2021, this study investigates the impact of DTA on firms’ technological catch-up (TC) and market catch-up (MC) from theoretical and empirical perspectives. The following findings are drawn. (1) DTA positively and significantly affects firms’ TC and MC, and the results remain valid after using the instrumental variables method, propensity score matching, and other robustness tests. After removing the order-of-magnitude discrepancies and dimensions, DTA had a more significant effect on MC than TC. (2) Dynamic capacity mediates the relationship between DTA and firms’ catch-up. (3) The heterogeneity analysis finds that DTA influences TC and MC in state-owned enterprises and high-tech firms more significantly. This study provides a new perspective on firms’ catch-up and guides for firms to develop effective DTA and catch-up strategies.

KEYWORDS:

• Technological catch-up
• market catch-up
• digital technology adoption
• dynamic capabilities

Disclosure statement

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

Data availability statement

The datasets used and analysed during the current study are available from the corresponding author on reasonable request.

Notes

1 The robustness test employs the logarithm of the enterprise's operating income to measure the output, the logarithm of the enterprise's net fixed assets to measure the capital investment, the logarithm of the enterprise's employee count to measure the labour input, and the logarithm of the raw material input to measure the intermediate input.

2 Standardised core explanatory variable coefficient = (unstandardised core explanatory variable coefficient * core explanatory variable standard deviation)/dependent variable standard deviation.

Additional information

Funding

This work was supported by National Social Science Fund of China (19BGL041).

Notes on contributors

Meifang Li

Meifang Li, a professor of technological innovation at Fuzhou University, focuses on technological catch-up.

Zihao Zhang

Zihao Zhang, a PhD candidate of technological innovation at Fuzhou University focusing on strategic management.