Digital transformation and firms' total factor productivity: The role of internal control quality

This paper examines the effects of digital transformation on firms' total factor productivity (TFP) and its underlying mechanisms using panel data from Chinese A-share listed companies between 2013 and 2021. By employing panel regression and mediation effect models, our findings demonstrate that digital transformation significantly enhances a firm's TFP. Furthermore, we reveal that digital transformation fosters TFP growth by enhancing the quality of internal control. This article offers novel insights into the mechanistic pathways through which digital transformation influences firm productivity.

Automated summary

This paper examines the effects of digital transformation on firms' total factor productivity (TFP) and its underlying mechanisms using panel data from Chinese A-share listed companies between 2013 and 2021. By employing panel regression and mediation effect models, the findings demonstrate that digital transformation significantly enhances a firm's TFP. Furthermore, it is revealed that digital transformation fosters TFP growth by enhancing the quality of internal control. This article offers novel insights into the mechanistic pathways through which digital transformation influences firm productivity.