How does digital transformation empower knowledge creation? Evidence from Chinese manufacturing enterprises

Abstract

Knowledge creation is the foundation for indigenous innovation in manufacturing enterprises; however, the effects of digital transformation on knowledge creation are still not well understood. Nonaka put forward the model of knowledge creation, which includes four processes: socialization, externalization, combination, and internalization, known as the famous SECI model. Based on the SECI model, this study analyzes the effects of digital transformation on four knowledge creation processes, using panel data from Chinese listed manufacturing enterprises from 2007 to 2020. The study provides several novel findings. First, digital transformation positively affects all knowledge creation processes, with the effects on knowledge combination capability being particularly notable. Second, the effects of digitalization inputs on externalization and combination are insignificant but exert a negative impact on socialization and internalization. Third, a heterogeneity analysis reveals that the facilitating effect of digital transformation is more significant in state-owned and large enterprises. Moreover, it primarily acts as the "cherry on top," significantly benefiting enterprises that already have strong knowledge creation capabilities. A low level of digital technology development in the region where an enterprise is located will inhibit the role of digital transformation in promoting knowledge socialization. Furthermore, enterprise innovation culture and regional innovation environments play positive moderating roles. This study contributes to further understanding of how digital transformation affects enterprises’ knowledge creation activities.