Unlocking the impact of digital technology progress and entry dynamics on firm's total factor productivity in Chinese industries

Abstract

In today's digital era, technology serves as a fundamental pillar of the digital economy, greatly transforming business models and re-evaluating the enterprises' worth. This theoretical study incorporates digital technology factors into a task-based model to discuss the impact of digital technology advancement and entry price on corporate total factor productivity (TFP) using 2008–2021 data from Chinese-listed companies. The findings show that advances in digital technology considerably help in improving corporate TFP. According to digital technology's pricing strategy, a decrease in the entry price is essential to advancing digital technology and improving TFP. An improvement in corporate management and operational capabilities contributes to incorporating digital technologies at a lower price, thus enhancing corporate TFP. In addition, digital technology advancement generates a heterogeneous TFP effect, which is highlighted in regions with well-protected intellectual property rights, enterprises with high-tech certifications, and nonstate enterprises. These findings demonstrate the empowering effect of emerging technologies on high-quality corporate development and provide strategic insights for companies to achieve digital transformation.