Corporate digital transformation and rank and file employee satisfaction

Abstract

PurposeThis paper examines the impact of corporate digital transformation on employee satisfaction. Therefore, this study extends our understanding of the economic consequences of corporate digital transformation from employees’ perspectives.Design/methodology/approachThe data used to construct our main proxy of employee satisfaction are collected from Kanzhun.com, which provides reviews by rank-and-file employees on their employers. This study uses a large sample of Chinese firms and adopts various empirical methods to examine the impact of digital transformation on employee satisfaction.FindingsWe find a significant positive relationship between corporate digital transformation and employee satisfaction. Moreover, we document that the relationship between corporate digital transformation and employee satisfaction is more pronounced in firms with higher labor intensity and in state-owned enterprises (SOE).Research limitations/implicationsOne significant limitation is that corporate digital transformation is constructed based on word frequency analysis. This approach may be influenced by variations in corporate disclosure practices and might not accurately capture the true extent of corporate digital transformation. This limitation is not only present in our research but is also pervasive in many other studies that utilize similar methodologies. Therefore, our results should be interpreted with this caveat in mind.Practical implicationsOur study suggests that corporate digital transformation enhances employee satisfaction, providing direct evidence for managers and regulators to promote corporate digital transformation. Through digital transformation, companies can not only improve operational efficiency but also foster employee satisfaction. This dual benefit underscores the importance of investing in corporate digital transformation for long-term success.Social implicationsOur study suggests that corporate digital transformation enhances employee satisfaction, providing direct evidence for managers and regulators to promote corporate digital transformation. Through digital transformation, companies can not only improve operational efficiency but also foster employee satisfaction. This dual benefit underscores the importance of investing in corporate digital transformation for long-term success.Originality/valueOur study contributes to the literature on the economic consequences of corporate digital transformation and extends existing research on the determinants of employee satisfaction. Additionally, it provides a novel measurement of employee satisfaction for a large sample of Chinese firms.