The Impact of Market Uncertainty on Digital Transformation: Evidence from Chinese Technology Firms with Technological Innovation as a Moderating Variable
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This study investigates the relationship between stock market uncertainty and digital transformation initiatives in Chinese technology firms, with technological innovation serving as a potential moderating variable. Using a comprehensive panel dataset of 5,280 firm-year observations from 2016 to 2022, we document a significant negative relationship between market uncertainty and digital transformation investments. However, this relationship is moderated by firms' technological innovation capabilities, where firms with stronger innovation profiles demonstrate greater resilience in maintaining digital transformation initiatives amid market turbulence. Our findings contribute to the growing literature on the determinants of digital transformation and provide practical implications for technology firms operating in volatile market environments. The results are robust to various model specifications, endogeneity concerns, and alternative measures of the key variables.
