How firms achieve high total factor productivity in digital transformation: a dynamic configurational perspective

Abstract

Total factor productivity (TFP) is a central driver of firms' high-quality development. The rapid expansion of the digital economy has fundamentally reshaped production processes and organizational structures, creating substantial potential for TFP enhancement. This study aims to investigate the key determinants, configurational pathways, and dynamic evolutionary trajectories through which firms achieve high TFP in the context of digital transformation. Grounded in the technology–organization–environment (TOE) framework and a configurational perspective, this study employs panel data from Chinese A-share listed firms. Using stage-based dynamic fuzzy-set qualitative comparative analysis (fsQCA), we identify multiple equifinal configurations associated with high firm-level TFP and examine their temporal evolution. The results reveal six equifinal configurational pathways leading to high TFP. No single antecedent condition is necessary; rather, high TFP emerges from complementary alignments among technological, organizational, and environmental conditions. The findings further reveal a dynamic evolutionary shift in TFP-enhancing pathways as external environments transition from stable to turbulent conditions. In addition, the productivity-enhancing effects of digital technology adoption are contingent upon firm-specific endowments and external environmental conditions. Unlike prior research emphasizing the net effects of isolated determinants, this study adopts a configurational perspective to demonstrate how multi-level factor combinations jointly shape firm-level TFP. By integrating the TOE framework with stage-based dynamic fsQCA, the study provides a novel explanation of how digital transformation translates into productivity gains and offers new insights into the contingent and evolutionary nature of TFP enhancement.