Corporate digitalisation and total factor productivity: evidence from Chinese A-share listed firms

As digital transformation strategies have emerged as a primary approach for enterprises to enhance their operational efficiency and productivity, it is crucial to empirically examine the impact of these strategies on Total Factor Productivity (TFP). To this end, this study considers these transformation strategies as a quasi-natural experiment and employs a propensity score-weighted difference-in-differences methodology on data from Chinese firms listed on the A-share market between 2007 and 2020. The key findings are as follows: (1) digital transformation is positively associated with TFP; (2) this finding remains robust after replacing the dependent variable with alternative TFP measures estimated using OLS, fixed effects (FE), and the Olley—Pakes (OP) method, and is further supported by the Generalized Boosted Regression Trees analysis after controlling for other determinants of TFP; (3) notably, the positive association between digital transformation and TFP is more pronounced among non-state-owned and technology-intensive enterprises. These results show the importance for firms to strengthen investment in research and development capabilities as well as digital competencies.