Digital Technologies, Innovation Ambidexterity, and Business Performance

Digital technologies differ in their potential contribution to firm performance. Understanding the underlying mechanism and boundary condition are key to explaining the variability in performance. Drawing on information processing theory (IPT), we theorize that digital technologies improve business performance through innovation ambidexterity, which reflects the information processing capabilities of firms. Considering the organizational structure factors, we draw on the digital innovation head’s managerial level and centralization and expect centralization to weaken the positive role of the digital innovation head’s managerial level in strengthening the digital technologies–innovation ambidexterity link. Performing ordinary least squares (OLS) regression with 174 samples in China, we find that innovation ambidexterity is a key mechanism linking digital technologies to business performance. Our results also provide good support for a three-way interaction effect of digital technologies, the digital innovation head’s managerial level and centralization on innovation ambidexterity. We advance research on digital and information processing theory (IPT) and recommend that digital transformation enterprises balance between the digital innovation head’s managerial level and centralization, thus better coping with the performance of digital technology adoption.