How Does Digital Transformation Facilitate Enterprise Total Factor Productivity? The Multiple Mediators of Supplier Concentration and Customer Concentration

Abstract

Nowadays, no organization or sector is immune to the influences of digital transformation. It has been generally recognized as a significant promoter of corporate efficiency and effectiveness. However, the literature on whether and how digital transformation can facilitate corporate total factor productivity is scarce. In this case, this paper aims to empirically investigate whether and how digital transformation can boost a firm’s total factor productivity. Using a sample of Chinese listed companies from 2007–2020 and structural equation model analyses in STATA 16.0, this paper identifies that (1) digital technology, one dimension of digital transformation, has no significant effects on enterprise total factor productivity, while digital application, the other dimension of digital transformation, can directly enhance enterprise total factor productivity; (2) both digital technology and digital application can indirectly boost enterprise total factor productivity through the decreasing of supplier concentration; and (3) digital technology adversely affects enterprise total factor productivity through the increasing of customer concentration, and digital application may positively affect enterprise total factor productivity through the decreasing of customer concentration. Our study is one of the first to explore the mediating effect mechanism of the relationship between digital transformation and enterprise total factor productivity from the perspective of supply chain management.