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Digital transformation and enterprise total factor productivity

The digital transformation of enterprises can be seen as a "techno-economic paradigm" revolution in the digital economy triggered by the integration of digital technologies with the real economy, which has a significant impact on the improvement of total factor productivity of enterprises7. The "techno-economic paradigm" structure of the digital economy is a new leading technological system with digital technology at its core, an industrial system with digitalisation and digital industrialisation at its core and a system of social applications for the digital economy derived from the traditional "techno-economic paradigm" structure8. Emerging digital technologies, with big data, cloud computing and artificial intelligence at their core, are integrating deeply with the real economy, bringing about disruptive changes. In turn, the economic form that emerges first mainly causes a chain of changes in all areas of society, culminating in a techno-economic paradigm shift in the entire economy. The digital economy is essentially a new paradigm shift in the technology economy, as can be seen when the current economic structure and shape changes are contrasted with the traditional economic structure and traditional economic shape. And digital transformation facilitates the development of the digital economy, which also has a significant impact on the total factor productivity of companies. Specifically, the impact of digital transformation on the total factor productivity of enterprises is manifested in four dimensions:

Firstly, the business operation mode is optimized. On the one hand, digital transformation of enterprises can promote business model innovation9, restructuring traditional business, management, service and business models10. Digital transformation touches various aspects of operations, management, marketing and cost control, and its essential feature is to trigger a change in business model, making the reformed business model more suitable for the development of the digital era and the multi-dimensional needs of customers11. For example, Goldwind Technology has built a business model for industrial products services based on the integrated, platform-based and quantitative features of digital technology12. Red Leader Group uses a typical C2M business model, which enables customers to submit personalized requirements and participate in design using Internet technology, and this information is uploaded to the customization platform to form a digital model, and through a series of links, customization services are completed13, this is conducive to absorbing new production factors, adjusting and optimizing production methods, and thus improving the total factor productivity of enterprises. On the other hand, companies can optimize their production models through digital transformation: by addressing challenges such as low value-added products and multiple market needs that cannot be effectively met, use the industrial Internet platform to improve user participation throughout the product life cycle, accurately locate and analyze user needs, and implement modular and personalized design, flexible manufacturing, and intelligent warehousing based on data integration and analysis, model library sharing, and supplier collaboration to achieve a high-efficiency, zero inventory production model14.

Secondly, reduce corporate agency costs. Agency cost theory suggests that out of inconsistent interests and inconsistent information, agents may act to undermine the contract to the detriment of the principal. Digital governance, as an extension of digital transformation, has become a key initiative to empower internal and external oversight mechanisms and break down information asymmetries between management and governance. This is evidenced by the fact that digital transformation can lead to changes in both external transaction costs and internal control costs, thus affecting the expansion and contraction of corporate boundaries15: on the one hand, the improvement of enterprise digitalization can reduce internal control costs and make the management and operation of the organization more efficient, specifically, information technology under digitalization can empower organizational management, facilitate timely communication between enterprises, reduce the coordination costs of various departments, and reduce information asymmetry letters16, at the same time, it can realize the real-time and transparent internal control link, reduce the space for divisional speculation, and reduce the supervision cost of vertically integrated enterprises and the efficiency loss caused by divisional agency problems17. On the other hand, the degree of digitization can reduce the external transaction costs of enterprises. Digital technology enables timely inter-company communication and real-time tracking of materials, which ensures that the details of transactions between companies and counterparties can be flexibly adapted to immediate needs even in the case of uncertain contracts, thus reducing the production-related costs of incomplete contracts15. In addition, highly transparent information on creditworthiness, performance record, technology level, product quality, reputation, etc. under digital technology increases the transparency of corporate information and avoids high production-related costs due to counterparty default or potential opportunistic behavior, thus reducing external transaction costs for companies18. Digital technologies such as cloud computing, big data and artificial intelligence provide connectivity to enable better communication within and with the outside of the enterprise, thereby reducing transaction costs and increasing productivity.

Thirdly, to improve the innovation capacity of enterprises. A corporate innovation ecosystem is a community with a comprehensive collaborative innovation support system, in which each innovation agent, through its own heterogeneity, collaborates with other agents to create value and forms a network of interdependence and symbiotic evolution7. On the one hand, companies are breaking down the spatial limitations of innovation activities through digital transformation. Digital technology can integrate the internal and external resources of an enterprise and can facilitate the rapid sharing and flow of knowledge and data elements between the business systems of an enterprise's innovation ecosystem3, enhancing the internal control operations of an enterprise through information optimisation effects, synergy spillover effects and signal demonstration effects19. On the other hand, digital transformation has also changed the innovation model and innovation approach changes in the corporate innovation ecosystem. From the perspective of innovation models, digitalization encompasses many aspects of technology discovery and value discovery, as well as iterative innovation by firms through generational development, From an innovation approach perspective, the data element makes it possible for the supply and demand side to innovate in business, the supply side influences production organization, resource allocation and supply mode, enabling the intelligent transformation of production technology, while the demand side focuses on user value, promoting convenient transactions and vivid experiences, thus adjusting business models and improving overall production efficiency20.

Fourth, to help upgrade the industrial structure. The optimisation and upgrading of industrial structure mainly refers to the improvement of industrial efficiency and rationalisation of industrial structure, which can be divided into rationalisation of industrial structure and advanced industrial structure. According to the new structural economics theory, industrial restructuring is the process of concentrating resources within an industry towards new products or areas of high efficiency and shifting resources to high value-added industries. The digital economy provides a new economic and technological paradigm for the construction of a modern industrial system by reengineering the industrial system through the "renewal" mechanism of the digitalisation of industry acting on traditional industries. Specifically, digital innovation technology realises the rationalisation of industrial structures: the deep integration of the digital economy and the real economy, the integration of the whole sector, the whole production process, the whole factor and the industrial life cycle, and the flow of technology, logistics, capital and talent to facilitate the transfer of production factors from inefficient industries to efficient industries21. The flow and sharing of factors between industries has brought about changes in production methods and reshaped new models of industrial development. Digital innovation technologies for organisational change and advanced industrial structures: on the one hand, the innovative combination of digital production factors, considering data as a new production factor, promotes the digitally driven re-engineering of enterprises' production processes, procedures, supply chains, internal management and market activities, thereby improving the total factor productivity of enterprises and industries and promoting the "renewal" of industries. On the other hand, the digital transformation of production processes and the realisation of multi-system interaction in production promote flexible production organisation and process re-engineering, and smart manufacturing improves the efficiency of collaboration between systems22. Accordingly, the hypothesis is formulated that:

Digital transformation has a significant positive impact on total factor productivity of enterprises.

Through the above analysis, digital transformation promotes the total factor productivity of enterprises by optimising their operation mode, reducing their agency costs, improving their innovation capability and helping to optimise and upgrade their industrial structure. However, there may be other pathways for the impact of digital transformation on the total factor productivity of heavily polluting firms when the focus of our study is on them. Therefore, this paper explores the impact of digital transformation on the total factor productivity of enterprises in terms of the level of green technology innovation, corporate social responsibility and cost stickiness paths.

Green technology innovation is a new type of technology innovation that integrates green design, development, production and marketing concepts into the whole life cycle of products in the innovation process, so as to achieve green and refined management in all stages of the enterprise life cycle and realize economic-ecological-social benefits23. In the wave of digitalization enterprises through digital transformation can largely empower the level of green technology innovation. Optimize and reorganize product design, R&D process, resource utilization, etc. So that enterprises can abolish high energy-consuming, high-polluting and low-efficiency production technologies, effectively control pollution emissions and resource waste, accelerate the elimination of backward production capacity, and instead achieve energy saving and emission reduction through green technology innovation28. Achieve the effect of winwin economic-ecological-social benefits, and improve enterprise production efficiency and management efficiency.

Digital transformation provides new ideas to improve the level of green technology innovation and total factor productivity of enterprises. According to the theory of natural resource-based view, the internal organizational elements such as technological capability of enterprises are the key to their green technological innovation and to improve their core competitiveness. In the era of digital economy, the integration of resources needs to be realized and accomplished with the help of next-generation information and communication technologies. First, digital technology can promptly identify enterprise value demands and effectively solve them, and its information detection function allocates funds and other qualitative resources to "green technology innovation projects" carried out by enterprises with outstanding economic benefits, rational use of resources, and coordinated development of environment and economy, forcing the "three high" enterprises to carry out green technology transformation, At the same time, the environmental data is fed back to the environmental governance department, and the environmental governance achieves an efficient closed-loop24, which promotes the development of green innovation in manufacturing enterprises. Second, enterprise digitization can promote information sharing and knowledge integration, and help optimize innovation technology resources. On the one hand, enterprise digitalization can produce information sharing effect to accelerate the integration of internal and external resources of the enterprise, to obtain, share and reorganize resources by enhancing communication sharing and information interchange of the enterprise, to explore the existing resources and potential innovation value, to provide resource base for green innovation, to create high compound value of resources, so as to optimize the innovation technology resources of the enterprise25. On the other hand, from the level of knowledge integration effect, green technology innovation integrates knowledge information from different fields, such as enterprise production, pollution reduction and energy consumption reduction, its green innovation process should create, integrate and diffuse knowledge from different fields within the organization26,27, and rationalize the use of internal and external knowledge in order to deeply understand the key technologies of green technology innovation. In contrast, enterprise digitization promotes collaborative and open innovation28, which helps companies to integrate and reconfigure knowledge elements from different technological domains and stimulates them to engage in green innovation. Third, based on environmental adaptation theory, the rapid changes in the external environment require companies to react and integrate quickly to adapt to the changes in the environment, while the use of digital technology can promote companies to adapt to external environmental shocks and get rid of organizational practices, providing new impetus for companies to implement green innovation technologies and expand the green innovation boundary. Fourth, the digital economy has improved the efficiency of resource allocation and real-time monitoring of the ecological environment, effectively reducing pollutant emissions; at the same time, the integration and development of the digital economy and the real economy have promoted innovation output, enhanced the efficiency of green innovation and reduced innovation costs. Especially for heavy polluting enterprises, the realization of "energy saving and emission reduction" needs the strong support of technological innovation, so heavy polluting enterprises need to focus on improving green technology innovation capabilities.

The improvement in the level of green technology innovation further enhances the total factor productivity of enterprises. First of all, green innovation is a new type of innovation that combines the advantages of both environmental protection and economic development. The effective play of green innovation as a green technology can confer competitive advantages to enterprises through isolation mechanisms and technology spillover29, and the application of green technology innovation can reduce costs, achieve green product differentiation, and other advantages, which can better compensate for the initial investment while bringing more benefits to enterprises and enhance the growth advantages of stakeholders by improving their environmental management systems and ultimately promote productivity30. Second, corporate green technology innovation has a natural advantage in the economic theory of corporate profit maximization. Green innovation activities by companies, whether it is green product innovation or process innovation, can increase the productivity of industry. Green product innovation can generate innovation spillover to upstream and downstream industries through the backward and forward linkage effect, and upstream and downstream supporting industries will strive to improve their own technology in order to meet the technological requirements of new product development enterprises, which will lead to a gradual increase in overall TFP. Green process innovation enables enterprises to reduce production costs per unit of output or increase output per unit of time while ensuring product quality, thus enabling them to optimise production processes, reduce the level of consumption of factor resources, increase output per unit of factor and promote efficiency change31. Furthermore, green technology innovation by enterprises to produce green products, or green technology innovation to reduce energy consumption and pollution emissions, quickly improve the negative image of heavy pollution enterprises in the public "high pollution, high emissions", improve the production technology, improve the unit output, effectively expand the market share of products, and improve the efficiency of enterprise production. In addition, under the change of national policy direction, the government strengthens the rigid constraints on enterprises to save energy and reduce consumption, pollution and carbon emissions, and focuses on promoting low-carbon development, green development, circular development, adjusting and optimizing industrial structure. Environmental subsidies from the government and financial institutions to some extent support the shortage of funds generated by the environmental investment behavior of enterprises in green technology innovation activities, improving their financing capacity and reducing environmental risks. Finally, after green technology innovation, firms can also transfer the green innovation technology and receive patent technology transfer fees, which contributes to the total factor productivity of the firm32. Accordingly, it is hypothesized that:

Digital transformation improves enterprise total factor productivity by promoting green technology innovation levels.

Corporate social responsibility mainly refers to the responsibility of companies to their employees, consumers, suppliers, communities, non-profit organizations and the environment, while generating profits and taking corresponding social responsibility to shareholders33. The fulfillment of corporate social responsibility includes the identification of social and environmental issues, the selection of social responsibility strategies and issues, and the participation of stakeholders in value creation. As a "high pollution" and "high emission" enterprise, heavy polluting enterprises have to bear the comprehensive responsibility of social, economic and environmental aspects. The Chinese government has also introduced a series of policies and regulations, including the new PRC Environmental Protection Law, and began issuing social responsibility standards at the national level in 2016. Under the dual pressure of social opinion and government control, heavily polluting enterprises have been paying more attention to social responsibility and have continued to integrate social responsibility concepts into their practices.

The digital transformation of enterprises is based on digital technology, which enables value co-creation for all stakeholders and brings new impetus to the fulfilment of corporate social responsibility. On the one hand, digital transformation enhances the willingness of enterprises to fulfill their social responsibility: The unique openness, co-creation and sharing nature of digital technology enables different interests to participate in the enterprise decision-making process34, Based on stakeholder theory, digital transformation innovates corporate business models, forming a network chain that integrates multiple groups such as shareholders, suppliers and consumers. In order to attract more quality resources and maintain a good social image, companies will actively engage in social responsibility to attract more stakeholders to join them, thus obtaining the expression of stakeholders' demands. On the other hand, digital transformation improves the ability of companies to fulfill their social responsibility: Companies using digital technology can quickly identify social and public environmental issues. For example, intelligent algorithms and blockchain technology are used to build optimal models and find the best solutions. By building or supporting the formation of a social resource integration platform, different social and environmental pain points are captured and identified in order to analyze the value propositions of multiple stakeholders, match the company's superior resources with them, and finally implement them into specific social responsibility issues to build a link between the company and society. Help strategic decision makers analyze, identify and select CSR issues from a more objective and open perspective, and promote the fulfillment and quality improvement of social responsibility. For example, by launching a social "energy conservation and emission reduction coalition" to leverage resources from relevant enterprises, NGOs and even governments or directly implement climate change issues35,36.

The active implementation of CSR can directly contribute to the improvement of total factor productivity. First, heavy polluters have an obligation to fulfill their social responsibility for environmental protection. According to signaling theory and social reputation effect, on the one hand, heavy polluters' concern for social and environmental responsibility can demonstrate to society the value contribution they make, as well as to stakeholders the good reputation and sustainable management philosophy of the enterprise, attracting more investors' attention, enabling the expansion of production scale and eventually increasing enterprise productivity. On the one hand, heavy polluters' concern for social and environmental responsibility can demonstrate to society the value contribution they make, as well as to stakeholders the good reputation and sustainable management philosophy of the enterprise, attracting more investors' attention, enabling the expansion of production scale and eventually increasing enterprise productivity37. Second, according to resource dependency theory, due to the uncertainty of the environment and the lack of sufficient resources, heavily polluting enterprises rely on the pursuit of more resources from the outside to reduce the adverse impact due to the external environment; Moreover, the daily business activities of a company need to coordinate with its stakeholders to help the company obtain potential resources and promote the sustainability of business operations. And companies actively fulfilling their positive corporate social responsibility can receive more quality resources for production and shareholder support from government and other institutions encouraging their R&D and innovation, etc. By promoting environmental technology innovation and production technology innovation through synergy with government and universities, integrating information, and using new resources and capabilities formed by the application of high-tech and promotional technologies to improve pollutant treatment processes, optimize production processes, and reform management systems, total factor productivity is gradually rising in stability33. Accordingly, the hypothesis is formulated that:

Digital transformation improves total factor productivity by increasing the willingness and ability of companies to fulfill their social responsibility.

Cost stickiness is mainly reflected in the asymmetry between cost and business volume, which is more significant when business volume increases than when business volume decreases, especially when the high cost stickiness caused by resource redundancy and resource mismatch reduces the efficiency of resource allocation38. The integration of the digital economy with the real economy is seen as a key measure to achieve effective cost management and optimal resource allocation39. Digital transformation can replace and innovate traditional manufacturing methods and curb the cost stickiness of companies from three perspectives: agency costs, adjustment costs and management's optimistic expectations.

The first is analysed in terms of agency costs. Digital transformation can mitigate agency risk arising from information asymmetry letters and curb cost stickiness. The use of digital technology makes it easier for principals and agents to communicate with each other by increasing the transparency and speed of information transmission, thus reducing the moral hazard of agents arising from information asymmetry, motivating agents to work towards the goal of maximising the interests of the principal and alleviating the problem of high cost stickiness40. In addition, with a digital management model based on collaborative sharing, dynamic supervision and big data communication, it is easier for principals to form effective monitoring of agents' behaviour, avoiding moral hazard due to information asymmetry, reducing cost stickiness and promoting the improvement of enterprise productivity. Secondly, an analysis in terms of adjustment costs. Digital transformation can reduce asset realignment costs, thereby curbing cost stickiness. In the traditional model, there are high adjustment costs for business assets and it is difficult to convert them to other uses38. Digital transformation can facilitate the cross-border integration of businesses into the digital economy and alleviate problems such as adjustment costs constraining corporate R&D activities. Under the digital platform model, companies have relatively lower resource alignment costs and consequently lower cost stickiness, which in turn leads to improved performance levels. When business volumes rise, the low-cost resource space of the digital platform provides sufficient information to help managers accurately forecast the resources needed to expand production capacity, meet the operational needs of expanded production and achieve productivity gains. When business volumes drop, management can identify idle and redundant resources that can be cut based on the Collaboration Cloud platform, improving resource allocation rates and reducing adjustment costs, thus reducing cost stickiness41. The reduction in adjustment costs helps the company to adjust its assets in a timely manner and improve the efficiency of asset utilization, which promotes the reduction of the company's cost stickiness and brings about an increase in the total factor productivity of the company38. Thirdly, analysis from the perspective of managers' optimistic expectations. Digital transformation dampened management's optimistic expectations and suppressed cost stickiness. By automating business processes, digital transformation can reduce human intervention and reduce the scope for self-interested manipulation by management, which can curb the cost stickiness of the company. On the one hand, companies can use digital technology platforms to build more complete databases of customer consumption information and accurate sales forecasting models, enabling managers to forecast future market demand more accurately, correcting optimistic forecasting biases caused by management's overestimation of future market demand and thus reducing cost stickiness. On the other hand, enterprises achieve intelligent management and effective cost control by means of digital technology such as big data, artificial intelligence and cloud computing42. In summary, the digital transformation of enterprises can reduce the cost stickiness of enterprises, make enterprise resources flexible and change according to market changes, improve the efficiency of resource allocation, expand the profit margin of enterprises, and thus improve the total factor productivity of enterprises. Accordingly, the hypothesis is formulated that:

H4: Digital transformation improves total factor productivity by reducing the cost stickiness of traditional businesses.

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