Moderating effect of economic policy uncertainty on the nexus between external stakeholders' factors and companies' digital transformation in China

Digital transformation is essential for competitive edge in China's rapidly evolving technology landscape. However, the journey towards it is fraught with challenges, including the need to manage relationships with external stakeholders and the influence of unpredictable economic policies on strategic planning and market conditions. Despite this, the specific impacts of these factors on digital transformation remain largely unexplored. To address this gap, this study investigates the role of key external stakeholders—analysts, customers, and suppliers—in influencing digital transformation within companies, focusing on how their impact fluctuates with economic policy uncertainty. Utilizing data from 3,545 Chinese listed companies from 2011 to 2021, we find that analyst coverage positively drives digital transformation, while high concentration among customers and suppliers acts as a deterrent. Importantly, we reveal that economic policy uncertainty weakens the positive effect of analyst coverage and exacerbates the negative impact of supplier concentration on digital transformation, with no significant moderation observed on the influence of customer concentration. Our research advances Stakeholder Theory by integrating the dynamics of economic policy uncertainty, highlighting its moderating role between firms and external stakeholders in the context of digital transformation. This fills a significant gap in the literature by providing a nuanced understanding of how external pressures and uncertainties can shape corporate strategies towards digital transformation. For businesses, our findings underscore the necessity of strategically managing relationships with analysts, customers, and suppliers while navigating the challenges posed by economic policy uncertainty. For policymakers, creating a stable economic policy environment emerges as crucial to supporting digital transformation initiatives, acknowledging the complex interplay of external influences on corporate strategic decisions. This study bridges theoretical gaps and offers practical insights for enhancing digital transformation success in an unpredictable economic landscape.

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