Digital Transformation, Dynamic Capabilities and Enterprise Innovation Performance Based on Dynamic Capability Theory and Upper Echelon Theory

Abstract

In the era of digital economy, digital transformation has become a hot issue for both academia and industry, especially for those manufacturing enterprises that are not “naturally digital”, it is important to use digitalization to reconstruct their capabilities and drive their innovation development. This study aims to analyse the impact of digital transformation on enterprise innovation performance, using data of Chinese manufacturing listed enterprises from 2008 to 2020. The results show that digital transformation can significantly improve enterprise innovation performance. Based on dynamic capability theory and upper echelon theory, we also empirically test the mediating role of dynamic capability and the moderating role of top management’s technical background and social capital. The results show that digital transformation can reconstruct the dynamic capability, which in turn affects their innovation performance. And top management’s technical background can strengthen the positive relationship between digital transformation and dynamic capability, while their social capital weakens the positive relationship between digital transformation and dynamic capability.