Enterprise digital transformation and employee treatment: Evidence from China

Abstract

Enterprise digital transformation can reshape corporate internal governance models, but it may also influence the workforce in the firms. This study explores the impact of enterprise digital transformation on employee treatment. We find that, enterprise digital transformation significantly promotes better employee treatment. Mechanism analysis reveals that the improvement of internal control and labor income share are potential pathways. Furthermore, the positive correlation between digital transformation and employee treatment is more pronounced in non-state-owned enterprises, technology-oriented firms, and firms with higher operational risk. Moreover, the results suggest that enterprise digital transformation can further enhance corporate value by improving employee treatment. The research suggests that the improvement of digital transformation can be an effective factor for the firms to enhance labor relations.