The impact of digital transformation on dual innovation: an investigation from the financing constraint perspective

The evolution of contemporary business is remarkedly shaped by digital transformation, emerging as the primary catalyst behind innovative initiatives. The relationship between digital transformation and financial constraints influences the endeavours of dual innovation. This study examines how digital transformation influences dual innovation via financing constraints, using data sourced from manufacturing firms listed on the Shanghai and Shenzhen Stock Exchanges from 2012 to 2021. Data analysis underscores several noteworthy findings: firstly, digital transformation enhances firms' capacity for both exploratory and exploitative innovations. Secondly, digital transformation's positive influence on exploratory innovations is positively mediated by mitigating firms' endogenous and exogenous financing constraints. Thirdly, endogenous and exogenous financing constraints do not mediate the relationship between digital transformation and exploitative innovation. Robust tests corroborate these findings. Based on the findings, the study's theoretical contribution and implication to business management and public policy are discussed.