Digital transformation and financial performance: the moderating role of entrepreneurs’ social capital

Current research on the relationship between digital transformation and financial performance (FP) remains inconclusive. This paper conceptualizes digital transformation as technology-based digital transformation (TDT) and market-based digital transformation (MDT), and explores their heterogeneous impacts on FP. It is further assessed how such distinctive effects are moderated by three types of entrepreneurs' social capital, i.e. entrepreneurs' technological social capital (ETSC), entrepreneurs' business social capital (EBSC), and entrepreneurs' institutional social capital (EISC). Using a carefully assembled dataset containing the relevant information of 2363 listed Chinese manufacturing firms covering the period of 2008–2018, these relationships are empirically examined, and the following is found: (1) TDT positively affects FP; (2) MDT has a time-lagged positive effect on FP; (3) ETSC positively moderates the relationship between MDT and FP; (4) EBSC positively moderates the impacts of TDT and MDT on FP. These findings enrich the understanding of the concept and application of digital transformation.