Digital transformation, external financing, and enterprise resource allocation efficiency

Abstract In a highly informative society, digital transformation has become a new driving force to enhance enterprise competitiveness and promote high‐quality economic development. This paper examines the impact of digital transformation on firms' resource allocation efficiency using a sample of Chinese A‐share listed companies in the manufacturing industry from 2007 to 2019. The research findings are as follows: The digital transformation has significantly improved enterprise resource allocation efficiency. Mechanisms suggest that digital transformation enhances resource allocation efficiency by attracting external financing, both equity and debt financing. Furthermore, the contribution of digital transformation to enterprise resource allocation efficiency is more pronounced in the eastern region, high‐tech industries, and non‐state‐owned enterprises. This paper provides new evidence for exploring effective paths to improve resource allocation efficiency from the digital transformation perspective. It is significant for accelerating enterprise digital transformation and achieving cost reduction and efficiency enhancement.