Confucianism and corporate digital transformation: evidence from China

Purpose This study aims to examine how Confucianism influences corporate digital transformation and explore the underlying mechanisms. Meanwhile, this study also seeks to analyze whether the relationship between Confucianism and corporate digital transformation significantly varies under different contextual conditions. Design/methodology/approach This study utilizes a sample of Chinese listed firms from 2012 to 2021 to empirically examine how Confucianism influences corporate digital transformation and validate the mechanisms of informal hierarchies, agency costs and financing constraints. Moreover, it explores the moderating effects of political connection and overseas culture. Subsample regressions assess the influence of corporate internationalization, property rights and regional marketization. Findings The findings of this study highlight the crucial role of Confucianism in driving corporate digital transformation. Confucianism contributes to corporate digital transformation by clarifying informal hierarchies, reducing agency costs and alleviating financing constraints. Nevertheless, political connection and overseas culture weaken the positive impact of Confucianism on corporate digital transformation. Further evidence indicates that Confucianism's influence on digital transformation is particularly pronounced in environments characterized by limited internationalization, heightened marketization and among non-state-owned enterprises. Originality/value This study elucidates the role of informal institutions in driving corporate digital transformation, enriching the literatures on the intersection of Confucianism and corporate digitalization. Our findings offer a novel perspective and contribute to management practice by exploring the mechanisms and contextual conditions.