Corporate digitalization, managerial power distance and corporate sustainability performance: evidence from China

Abstract

PurposeThis study aims to investigate the impact of managerial power distance on the corporate sustainability performance of Chinese firms and to explore the regulatory role of corporate digitalization in the Chinese capital market.Design/methodology/approachThe study collects data from 2,632 A-share Chinese non-financial firms listed on Shanghai and Shenzhen stock exchanges during the period from 2010 to 2020. The authors apply different panel data regression techniques (fixed effects, GMM-System) to investigate the impact of managerial power distance on corporate sustainability performance and to explore the regulatory role of corporate digitalization in the Chinese capital market.FindingsThe results of the study show a positive relationship between high managerial power distance and the sustainability performance of Chinese non-financial firms. This positive relationship is particularly pronounced in Chinese state-owned enterprises (SOEs). The results also show that corporate digitalization increases the sustainability performance of Chinese firms. Further, corporate digitalization weakens the positive relationship between high-power distance and the sustainability performance of Chinese firms. These results are robust to alternate sustainability performance measures and various regression techniques.Originality/valueTo the best of the authors' knowledge, this is the first study that investigates the regulating impact of corporate digitalization on the relationship between managerial power distance and corporate sustainability performance in China.

Leveraging digital transformation on the path to sustainable development: the role of excellence models

“…The reallocation of resources that a digital strategy requires can destabilise well-functioning business connections, which would be an operational risk to any organisation (Zhang et al. , 2023a).…”

“…Organisations have slowly incorporated these objectives into their strategies (van der Waal and Thijssens, 2020). The scientific community, wanting to contribute to a prosperous but sustainable future, also selected the factors influencing the success of sustainable development in organisations as one of its main concerns (Zhang et al. , 2023a).…”

“…, 2019). In addition to the competitive advantages, digital transformation can bring chaos within organisations, with challenges for managers and employees (Zhang et al. , 2023a).…”

“…Although digital transformation aims to increase competitiveness, sometimes efficiency islands are created, causing disruptions in organisational culture, and reducing the effectiveness of processes. As such, it can destabilise effective organisational connections, having a disruptive impact (Zhang et al. , 2023a) and bringing high risks for organisations (Ponsignon et al.…”

“…Although digital transformation aims to increase competitiveness, sometimes efficiency islands are created, causing disruptions in organisational culture, and reducing the effectiveness of processes. As such, it can destabilise effective organisational connections, having a disruptive impact (Zhang et al, 2023a) and bringing high risks for organisations (Ponsignon et al, 2019). Organisational culture is crucial to enable quick adjustments to changes to different skills and technologies in the demand for successful digital transformation (Luu, 2023).…”