Doing business in the city: environment configurations and firm digital transformation

Purpose Digital transformation (DX) is advancing in the post-pandemic era, yet regional disparities remain pronounced. This uneven distribution may be attributed to cities’ doing business environment. As the doing business environment comprises various components, we aim to explore how these components interact to affect local firms' DX, thereby identifying which configurations of the doing business environment contribute to firms' DX. Design/methodology/approach The doing business environment in our study contains seven components: public services, government, legal, innovation, market, human resources and financial services environments. We adopt a fuzzy-set qualitative comparative analysis approach to determine the necessary and sufficient conditions for firms' high-level DX. The sample consists of enterprises listed on the China Science and Technology Innovation Board. Findings Firstly, a single doing business environment component is unnecessary for firms to produce a high- or non-high-level DX. Secondly, four configurations of the doing business environment explain firms' high-level DX of three general types: doing business environment configurations (1) dominated by the cost hypothesis, (2) synergised by the cost and resource hypotheses and (3) dominated by the resource hypothesis. Thirdly, the configurational paths generating firms’ high- or non-high-level DX are asymmetric and only one doing business environment configuration will lead to firms' non-high-level DX. Originality/value This study presents a ground-breaking exploration of the mechanisms driving firms' DX in terms of the city-level doing business environment and its dual functions. Additionally, we elucidate the reasons for the uneven regional distribution of DX development.