Effect of big data on enterprise financialization: Evidence from China's SMEs

Abstract

China's advancement in big data technology is poised to resolve the dilemma of the “shift from real to virtual” for enterprises and foster a virtuous economic and financial cycle. This study concentrates on China's small and medium enterprises (SMEs) to explore the economic impact of big data on enterprise financialization. The findings indicate that big data significantly reduces the dependency on financial asset allocation and mitigates the inclination toward financialization. These effects are more pronounced in enterprises facing financing constraints, in the maturity stage, and in highly competitive industries. Further mechanism analysis suggests that resource crowding-out, governance change, and risk diversification are important micro-mechanisms through which big data inhibits the financialization of enterprises. This study theoretically enriches the research on enterprise digital transformation and deepens the internal logical links between big data technology and enterprise economic behavior. It also provides empirical evidence and policy implications for preventing the potential risks of industrial “hollowing out” and promoting a virtuous economic and financial order cycle.