A study of digital transformation and MSMEs performance from a spatial perspective: Evidence from China

Abstract

Aim/purpose – Not only have micro, small, and medium enterprises (MSMEs) been regarded as a driving force of the national economy, but they have also become im- portant in promoting innovation and entrepreneurship. In general, today’s MSMEs face problems, such as high business costs, insufficient innovation, and inadequate manage- ment capabilities, that have all forced the digital transformation of MSMEs. However, in existing studies, the impact of digital transformation on performance is controversial, and the subjects are generally listed companies. In this paper, we have decided to use micro business survey data and analyze them from a spatial perspective to explore how MSMEs’ digital transformation plays a role in influencing performance and the path of its effect. Design/methodology/approach – We use a sampling method with a dual directory- -regional sampling frame to investigate MSMEs in Ningbo City, Zhejiang Province, China and then delve into the impact of digital transformation on enterprise performance from a spatial perspective by the spatial weighted logit model. Findings – Hierarchical analysis shows that there is a large room for improvement in the Digital transformation of enterprises. The digitalization level of an enterprise has a posi- tive impact on performance. While from a spatial perspective, the digitalization level of neighboring enterprises has a negative impact on the performance of the enterprise. Path analysis shows that the digital transformation of enterprises can increase innovation, reduce costs, and improve the performance of enterprises. Originality/value – We provide an empirical basis for vigorously promoting the digital transformation of enterprises, jointly building digital parks, and improving enterprise performance by reducing costs and improving efficiency. At the same time, it provides relevant suggestions for digital transformation for manufacturing MSMEs that are hesi- tant to see or are at a loss in the digital transformation and helps manufacturing MSMEs to achieve cost reduction and increase efficiency. Keywords: MSMEs, digital transformation, double sampling frame, performance analysis. JEL Classification: C13, C81, M30, O33.