Empowering Breakthrough Innovations Through Digital Technology: The Effects of Digital Technology Depth and Breadth

The advent of digital technology has empowered firms to make breakthrough innovations; however, how digital technology adoption (especially its depth and breadth) influences such innovations remains unknown. This study addresses this gap by analyzing panel data from 469 listed biomedical companies in China from 2010 to 2021 using a knowledge-based view (KBV). Results show the following: (1) both dimensions of digital technology adoption are positively correlated with firms’ breakthrough innovations; (2) firms’ knowledge recombination novelty mediates these relationships; (3) the mediating effect of knowledge recombination novelty diminishes as firms’ knowledge base increases. Additional analysis indicates that the positive impacts of digital technology depth and breadth on breakthrough innovations are stronger for enterprises located in cities with high digital infrastructure construction levels (high-DICs) than enterprises located in low (and medium)-DIC cities. These findings enhance existing research on the mechanisms and boundary conditions of digital technology-driven breakthrough innovation and offer new insights for enterprises to gain sustainable competitive advantage in the digital era.