Weaving technology with culture: revealing the impact of collectivism on digitalization

Purpose This paper explores the intersection of cultural factors, particularly collectivism, and digitalization strategies. It investigates how collectivist values can influence decision-making processes, enhance collaboration, and impact a company’s ability to innovate and adapt to digital transformation. Design/methodology/approach This paper investigates the influence of collectivist culture on corporate digitalization based on Chinese listed companies in China from 2007 to 2020. We document a positive relationship between collectivism and digitalization within firms. This result is validated by various robust checks, including employing alternative measurements for digitalization and collectivism, as well as robust regression methodologies. Instrumental variables—annual rainfall and latitude distance to the Qin Mountain and Huai River line—are used to address potential endogeneity issues, validating the causal impact of collectivism on digitalization. Findings Our findings reveal that collectivism promotes digitalization through enhanced intra-organizational cooperation, increased risk-taking capacity, and forward-looking perspectives. Additionally, we highlight that strong formal institutions and good corporate governance amplify the effect of collectivism, and foreign experience among leaders dampen its influence. Importantly, collectivism helps firms overcome financial constraints, further promoting digitalization. Practical implications This paper carries significant implications for corporate strategy and governance. It suggests that organizations embracing collectivist values may foster more effective digital transformation initiatives, improving operational efficiency and market competitiveness. The findings highlight the potential benefits of aligning corporate governance with cultural norms for enhanced decision-making and innovation. Originality/value This paper contributes original insights by examining the underexplored link between collectivist cultural values and corporate digitalization through the lens of the resource-based theory. It provides a novel framework for understanding how cultural norms can be synergized with digital strategies. This paper enriches the discourse on organizational behavior and digital transformation, presenting actionable strategies for global businesses navigating diverse cultural landscapes.