Top managers with information technology backgrounds and digital transformation: Evidence from small and medium companies

Abstract

Small and medium-sized enterprises (SMEs) often struggle to successfully realize digital transformation (DT) due to constraints of size, technology, capital, and the ability and willingness to transform. This study first investigates the effect of top managers with information technology (IT) backgrounds on SMEs' DT from the perspective of within the business organization by using Chinese-listed company data from 2005 to 2020. The results show that IT top managers significantly facilitate SMEs' DT, especially for non-state-owned companies and those located in highly market-oriented regions. Mechanism analysis reveals that IT top managers promote SMEs' DT by increasing IT investment, reducing information asymmetry, and lowering financing constraints. Our findings provide new insights into solving SMEs' DT dilemma and improving the endogenous dynamics of digitalization among SMEs from a top-down perspective within the company.