Study of the impact of digital transformation on business performance in manufacturing enterprises

Abstract

Amid the revolution in information technology, the digital transformation of manufacturing is reshaping traditional production models toward smart systems. While existing research has explored industrial digitalization at a macro level, systematic studies on how micro-level manufacturing firms evolve in performance and innovation during this process remain limited. This article aims to reveal the performance changes of manufacturing enterprises during digital transformation and examine the dynamic interaction between these changes and technological innovation capability. The study constructs a multi-level framework linking “digital transformation–innovation capability–corporate performance” focusing specifically on the mediating role of innovation capability in the transformation-performance relationship and comparing heterogeneous effects across ownership types and geographic regions. Using data from Chinese A-share listed manufacturing companies from 2019 to 2023, the research applies empirical modeling to test the proposed relationships. Findings indicate that digital transformation significantly enhances corporate performance, with innovation capability playing a crucial mediating role. Heterogeneity analysis shows that state-owned enterprises experience stronger performance gains than non-state-owned firms, and companies in central and western China benefit more than those in the eastern region. Based on these results, the study offers practical policy recommendations to support effective digital transformation in manufacturing.