Digital Transformation and Breakthrough Innovation in Chinese Manufacturing Firms: Based on Ability-Motivation-Opportunity (AMO) Framework of Human Capital

Abstract

This paper explores how digital transformation influences breakthrough innovation by adopting the AMO framework of human capital. Through the analysis of data from A-share listed companies in China’s manufacturing industry spanning from 2012 to 2021 using fixed-effect OLS and Sobel test, the study reveals that digital transformation significantly fosters breakthrough innovation within manufacturing companies. This positive impact is attributed to the enhancement of abilities, activation of motivation, and expansion of opportunities for human capital, thus facilitating breakthrough innovation. Furthermore, the study highlights that the impact of digital transformation on breakthrough innovation is particularly pronounced in state-owned and high-tech companies. Additionally, it is observed that companies located in the eastern region of China experiences more robust promotion effects compared to those in central and western regions. Significances and implications are discussed.