Effect of digital transformation on open innovation

In the digital economy, digital transformation presents significant opportunities for companies in developing countries to enhance their open innovation capabilities. However, the effectiveness of this transformation is often undermined by managerial short-sightedness, which prevents a long-term strategic outlook. This study investigates the relationship between digital transformation and corporate open innovation, specifically examining how managerial myopia moderates this effect. Using a sample of A-share listed companies in Shenzhen and Shanghai from 2007 to 2020, we employ text data mining and panel data linear regression models to analyze our data. Our findings reveal that digital transformation positively influences the level of corporate open innovation. However, this relationship is negatively moderated by managerial myopia, which significantly inhibits the benefits of digital transformation. Interestingly, while digital transformation facilitates closed innovation more strongly than open innovation, managerial short-sightedness exerts a greater negative impact on this relationship. This research contributes to the literature on innovation and management by highlighting the critical role of managerial characteristics in hindering digital transformation and open innovation in developing countries. By addressing these issues, the study underscores the need for organisations to foster a long-term perspective among managers to fully leverage the benefits of digital transformation for open innovation.