The Impact of Executive Heterogeneity on Firm Performance - Mediating Role Based on Digital Transformation of Firms

Abstract

According to the "14th Five-Year Plan for Digital Economy Development" issued by the State Council, major enterprises should insist on digital development as the guide to promote the digital transformation of enterprises. The degree of digital transformation of enterprises is affected by the cognitive ability of managers, so the strategic decisions made by executives are crucial to enterprises, which will not only affect the development direction of enterprises, but also further influence the performance. Therefore, this paper selects A-share listed companies in China from 2010-2019 as the research object, and empirically tests the interrelationship between executive heterogeneity, corporate digital transformation, and corporate performance from three dimensions: executive age, financial background, and overseas background, supported by higher-order theory, and the findings show that (1) executive team age heterogeneity, financial background heterogeneity, and overseas background heterogeneity are all significantly and positively related to corporate performance significantly and positively; (2) executive team age heterogeneity is significantly and negatively related to corporate digital transformation, while executive team financial background heterogeneity and overseas background heterogeneity are significantly and positively related to corporate digital transformation; (3) corporate digital transformation is significantly and positively related to corporate performance; and (4) corporate digital transformation shows a partial mediating effect in executive heterogeneity and corporate performance.