More is Better or Too Much: Enterprise Digital Inputs and Total Factor Productivity

Shuang Liu

doi:10.5281/zenodo.14550163

Authors

Shuang Liu Department of Economics and Management, Qilu University of Technology (Shandong Academy of Sciences

DOI:

https://doi.org/10.5281/zenodo.14550163

Keywords:

digitized inputs, total factor productivity, financing constraints, agency costs

Abstract

Digital input is an important way for enterprise development, but there is inconsistency as to whether digital input can sustainably improve enterprise total factor productivity. This paper empirically examines the relationship between digital inputs and enterprise total factor productivity using Shanghai and Shenzhen A-share listed enterprises as research samples. The results show that the relationship between digital inputs and enterprise total factor productivity is inverted U-shape, i.e., the impact of digital inputs on enterprise total factor productivity is not more than good, but may lead to too much, and the above conclusions are still valid after a series of robustness tests and the use of a variety of methods to mitigate endogeneity. Mechanism tests further suggest that financing constraints and agency costs are important ways in which firms' digital inputs affect total factor productivity. The heterogeneity test finds that the inverted U-shaped relationship between firms' digital inputs and total factor productivity is more significant in state-owned enterprises, industries with high marketization levels, and high-tech manufacturing. The findings of this paper enrich the theoretical research on the economic consequences of enterprise digitalization inputs, and provide an important reference for promoting the implementation of enterprise digitalization and achieving high-quality development.

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