From digital to innovative: How does digital transformation affect corporate innovation?

Abstract

We document that digital transformation significantly enhances corporate innovation, including both exploitative and exploratory types. This finding is supported by instrumental variable regression analysis. Digital transformation improves innovation efficiency by accelerating the conversion of research and development activities into patents and by reducing the time between patent application and approval. Improvements in labor quality and access to financing serve as mediating channels through which digital transformation fosters innovation, with a stronger mediating effect on exploitative innovation. In contrast, digital transformation exerts a more pronounced direct effect on exploratory innovation.