Research on the impact of managerial capabilities on the digital transformation of enterprises
Abstract
Digitalization has brought profound changes to enterprises. As the main decision maker of firm, manager has an important impact on the digital transformation of enterprises that cannot be ignored. Based on the perspective of managerial heterogeneity, we tested the impact of managerial ability on the digital transformation of enterprises in China context. The results showed that managerial ability has a significant positive impact on the digital transformation of enterprises, that is, the stronger the managerial ability, the higher digitalization of firm. The mechanism study confirmed that managerial ability can overcome strategic inertia and improve capital allocation efficiency, then promote digital transformation of firm. Further research showed that the younger the top management team, the more significant the positive effect is; Independent directors can provide resources and play a consulting role to promote the impact of managerial ability on the digital transformation of firm; The older the firm is, the stronger the organizational inertia is, which can impede the impact of managerial ability on the digital transformation of firm. This study enriches the literature about executives, and has a certain practical significance for digitalization implement of enterprises.
Keyword : managerial ability, digital transformation, strategic inertia, capital allocation efficiency, DEA, TMT age, independent director, firm age
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Barker III, V. L., & Mueller, G. C. (2002). CEO characteristics and firm R&D spending. Management Science, 48(6), 782–801. https://doi.org/10.1287/mnsc.48.6.782.187
Che, D., Dai, M., & Wu, F. (2021). Study on the influence and mechanism of enterprise digital transformation on financing cost. Financial Regulation Research, 12, 56–74. https://doi.org/10.13490/j.cnki.frr.2021.12.006
China Academy of Information and Communications Technology. (2021). White Paper on China’s Digital Economy Development. http://www.caict.ac.cn
Demerjian, P., Lev, B., & McVay, S. (2011). Quantifying managerial ability: A new measure and validity tests. Management Science, 58. https://doi.org/10.2139/ssrn.1266974
Demerjian, P., Lewis-Western, M., Lev, B., & Mcvay, S. (2013). Managerial ability and earnings quality. https://doi.org/10.2139/ssrn.1650309
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The Journal of Law & Economics, 26(2), 327–349. https://doi.org/10.1086/467038
Gray, J., & Rumpe, B. (2017). Models for the digital transformation. Software & Systems Modeling, 16, 307–308. https://doi.org/10.1007/s10270-017-0596-7
Gu, F., & Zhang, W. (2020). The digital transformation strategy for Chinese catering chain enterprise based on value chain theory. China Soft Science, 11, 134–142.
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 2(9), 193–207. https://doi.org/10.2307/258434
Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383–396. https://doi.org/10.5465/amr.2003.10196729
He, W., Liu, W., & Huang, K. (2016). Managerial ability and corporate risk-taking. China Soft Science, 5, 107–118.
Hopkins, W. E., Mallette, P., & Hopkins, S. A. (2013). Proposed factors influencing strategic inertia/strategic renewal in organizations. Academy of Strategic Management Journal, 12, 77–94.
Li, J., & Yi, T. (2010). CEO hubris and firm risk taking in China: The moderating role of managerial discretion. Academy of Management Journal, 53(1), 45–69. https://doi.org/10.5465/amj.2010.48036912
Lin, Y. (Lisa), Shi, W., Prescott, J. E., & Yang, H. (2019). In the eye of the beholder: Top managers’ long-term orientation, industry context, and decision-making processes. Journal of Management, 45(8), 3114–3145. https://doi.org/10.1177/0149206318777589
Lyu, Y., Han, S., & Su, J. (2016). Performance architecture of organizational inertia: Origins, dimensions and emerging path. China Industrial Economics, 10, 144–160. https://doi.org/10.19581/j.cnki.ciejournal.2016.10.010
Ni, K., & Liu, X. (2021). Digital transformation and enterprise growth: Logic and practice of China’s capital market. Business and Management Journal, 43(12), 79–97. https://doi.org/10.19616/j.cnki.bmj.2021.12.005
North, K., Aramburu, N., & Lorenzo, O. J. (2020). Promoting digitally enabled growth in SMEs: A framework proposal. Journal of Enterprise Information Management, 33(1), 238–262. https://doi.org/10.1108/JEIM-04-2019-0103
Qi, Y., Du, B., & Wen, X. (2021). Mission embeddedness and pattern selection of digital strategic transformation of SOEs: A case study based on the typical practice of digitalization in three central enterprises. Management World, 37(11), 137–158+10. https://doi.org/10.19744/j.cnki.11-1235/f.2021.0176
Tanikawa, T., & Jung, Y. (2016). Top management team (TMT) tenure diversity and firm performance: Examining the moderating effect of TMT average age. International Journal of Organizational Analysis, 24, 454–470. https://doi.org/10.1108/IJOA-02-2014-0739
Taylor, R. N. (1975). Age and experience as determinants of managerial information processing and decision making performance. Academy of Management Journal, 18(1), 74–81. https://doi.org/10.5465/255626
Vial, G. (2019). Understanding digital transformation: A review and a research agenda. The Journal of Strategic Information Systems, 28(2), 118–144. https://doi.org/10.1016/j.jsis.2019.01.003
Wang, M., Song, Y., Yan, H., & Zhang, X. (2022). Impact of digital transformation on the scope of firm internationalization: The mediating role of dynamic capability. Foreign Economics & Management, 44(5), 33–47. https://doi.org/10.16538/j.cnki.fem.20211212.204
Wen, Z., & Ye, B. (2014). Analyses of mediating effects: The development of methods and models. Advances in Psychological Science, 22(5), 731–745. https://doi.org/10.3724/SP.J.1042.2014.00731
Wiklund, J., & Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized business. Strategic Management Journal, 24, 1307–1314. https://doi.org/10.1002/smj.360
Wu, F., Hu, H., Lin, H., & Ren, X. (2021). Enterprise digital transformation and capital market performance: Empirical evidence from stock liquidity. Management World, 37(7), 130–144+10. https://doi.org/10.19744/j.cnki.11-1235/f.2021.0097
Wu, J., & Guan, B. (2015). The effect of top management team characteristics on international market entry mode: The mediating role of attention. Management Review, 27(11), 118–131. https://10.14120/j.cnki.cn11-5057/f.2015.11.012
Yao, L., Chen, X., Zhou, Y., & Chen, X. (2020). Management ability and investment efficiency. Accounting Research, 4, 100–118.
Yuan, C., Xiao, T., Geng, C., & Sheng, Y. (2021). Digital transformation and division of labor between enterprises: Vertical specialization or vertical integration. China Industrial Economics, 9, 137–155. https://doi.org/10.19581/j.cnki.ciejournal.2021.09.007
Yeow, A., Soh, C., & Hansen, R. (2018). Aligning with new digital strategy: A dynamic capabilities approach. The Journal of Strategic Information Systems, 27(1), 43–58. https://doi.org/10.1016/j.jsis.2017.09.001
Yi, J., Zhang, Z., Yang, X., & Wang, Y. (2021). Internet enterprise organizational inertia, digital capability and business model innovation. Nankai Business Review, 1–27.
Zhang, L., Li, J., Yuan, Z., & Yue, H. (2021). The effect of managerial ability on capital market stability. Journal of Financial Research, (9), 188–206.