Research on How Executive Connections Affect Enterprise Digital Transformation: Empirical Evidence from China

Abstract

In the context of the digital economy, the external connection of executives provides enterprises with a good idea to amplify their potential for digital transformation with the help of external forces. Therefore, we conduct a theoretical exploration and an empirical analysis of the relationship between executive connections and enterprise digital transformation. As the research sample, we use the A-share manufacturing companies listed in China from 2012 to 2021. According to sufficient verifications, we discover that executive connections can effectively support digital transformation. From the perspective of each subdivision dimension, executive business connections, executive technical connections, and executive financial connections can significantly promote digital transformation, among which executive technical connections have the greatest favorable impact. However, the impact of executive political connections on digital transformation is not obvious. Additionally, executive connections primarily foster enterprise digital transformation by reducing enterprise asset specificity. The results of the boundary mechanism test demonstrate that the external environmental dynamics and the internal dynamic capabilities reinforce the positive effect of executive connections on digital transformation. These findings contribute to a deeper understanding of the role of executive connections in digital transformation and provide practical guidance for firms to accelerate digital transformation.

CEO discretion and enterprise digital transformation

“…Upon testing H1 , it is found that corporate CEO discretion significantly facilitates digital transformation. The main factors influencing digital transformation are financial asset allocation, stability of the executive team, director linkages, financing methods, R&D expenditure, and firm financialisation [ [58] , [59] , [60] , [61] , [62] , [63] ]. Li and Rui argue that the stewardship theory applies to China's real enterprises, and CEO discretionary power shows a significant negative relationship with corporate financialisation [ 64 ].…”

Do political connections facilitate or inhibit firms’ digital transformation? Evidence from China’s A-share private listed companies

“…As it takes some time from when municipal party secretaries take office to when they have a real impact on the economic development of the prefecture-level city in which they are located, if a new municipal party secretary takes office from January to June of the current year, the current year is defined as the change year; otherwise, the next year is defined as the change year. The results in Columns (7) and (8) of Table 14 demonstrate that the absolute values of Rel_PC regression coefficients are higher for the samples in which municipal party secretaries changed in the year during which firms are at the prefecture level than for the samples without a change in the number of municipal party secretaries, indicating that a change in the number of municipal party secretaries increases the inhibitory effect of political connections on corporate DT.…”

“…Many enterprises facing resource constraints seek to build political connections in the DT process [ 6 ]. On one hand, political connections can help enterprises reduce political uncertainty, enabling them to obtain substantial support in information, technology, talent, funding, and other aspects during the DT process and achieving strategy and resource sharing among enterprises [ 7 , 8 ]. On the other hand, the decision-making behavior of enterprises with close political connections is also more susceptible to government influence, participating more in nonproductive activities, weakening corporate performance, and possibly not fully achieving optimal resource allocation [ 9 , 10 ].…”

Organisational digital capability: a cross-country review of guidance

“…Although it is the most commonly applied in the UK with many cases are available through Jisc, there remains little peer-reviewed published research into the way it has been applied (see Foster et al ., 2023). Evidence does, however, highlight how an organisation’s climate for shared decision-making influences how employees voluntarily contribute or share new ideas during digital transformation (Haskasap et al ., 2023) and how executives' business, technical and financial connections can support (or otherwise) digital transformation efforts (Bai et al ., 2023). This evidence highlights it is reasonable to expect variations in the engagement of the framework in higher education, partly depending on its fit with existing cultures and the style of the that engagement over time (also see Huber et al ., 2023).…”