Can digital transformation overcome the enterprise innovation dilemma: Effect, mechanism and effective boundary

This study uses the data of China's A-share listed companies and prefecture-level cities to investigate how digital transformation overcomes enterprise innovation dilemma. It is found that China's enterprises are indeed faced with the innovation dilemma that R&D investment does not significantly improve the TFP. Digital transformation can overcome the innovation dilemma by improving the innovation quality and enhancing the capacity of absorption and transformation. Furthermore, the impact of digital transformation features increasing returns to scale. The state-owned enterprises, technological enterprises and growth enterprises are better able to solve the innovation dilemma through digital transformation. This study clarifies the relationship between digitization and innovation from a new perspective.