PurposeThe purpose of this paper is to investigate the relations between the digital transformation of manufacturing enterprises and enterprise innovation to provide inspiration for promoting the digitization and upgrading of China's manufacturing industry and facilitate enterprises' innovative development.Design/methodology/approachBased on a panel data of 584 listed manufacturing companies in China from 2016 to 2020, and using a fixed effects approach, this paper empirically examines the impact of digital transformation on corporate innovation in manufacturing enterprises, as well as examining the influential mechanisms and heterogeneity.FindingsThe research shows that the digital transformation of manufacturing enterprises has effectively improved the innovation capacity of enterprises and verifies different situations through heterogeneity. At the same time, the research clarifies the mediating effect of the innovation investment mechanism, cost control mechanism, and profit guarantee mechanism on the relations between the digital transformation of manufacturing enterprises and the innovation capacity of enterprises.Originality/valueBased on Chinese manufacturing enterprise samples, this paper empirically tests the influential mechanism of digital transformation on the innovation capability of manufacturing enterprises, therefore clarifying the main mediating effects. This paper could provide inspiration for manufacturing companies to make good use of digital transformation rules according to their own situation and improve their innovation capabilities, thereby enhancing competitiveness in the digital economy era.

PurposeChina's digital economy is flourishing and playing a pivotal role in the national economy. Government subsidies, as an important tool for the national treasury, are a “reassurance” for the digital transformation of manufacturing enterprises. The purpose of this paper is to investigate the relations between the digital transformation of manufacturing enterprises and government subsidies to provide inspiration for promoting the digitization and upgrading of China's manufacturing industry and facilitate enterprises' innovative development.Design/methodology/approachBased on the panel data of 2,928 manufacturing listed companies in China from 2016 to 2020, this paper empirically tests the effect of subsidies on the digital transformation of manufacturing enterprises using fixed-effect econometric regression.FindingsThe results illustrate that subsidies effectively incentivize digital transformation in manufacturing enterprises, and verify different situations through heterogeneity. Further analysis of the moderating effect shows that the innovation level and servitization level of manufacturing enterprises positively moderated the relationship between government subsidies and the enterprise's digital transformation.Originality/valueBased on Chinese manufacturing enterprise samples, this paper empirically tests the incentive effect of government subsidies on the digital transformation of manufacturing enterprises, therefore clarifying the main regulatory effects. This paper could provide enlightenment for manufacturing enterprises to make good use of government subsidies to improve their digital ability, thereby enhancing competitiveness in the digital economy era.