Chen, ShunruAlexiou, ConstantinosLee, Seungrae2024-12-032024-12-032024-12-31Chen S, Alexiou C, Lee S. (2024) Beyond binary: exploring the interplay of China’s digital transformation and firm performance through dual mechanism analysis. Asia Pacific Business Review, Available online 2 December 20241360-2381https://doi.org/10.1080/13602381.2024.2434010https://dspace.lib.cranfield.ac.uk/handle/1826/23239Utilizing data from Chinese A-share listed firms we explore the paradoxical effects of digital transformation on firms’ financial and operational performance. Through text mining, mechanism and heterogeneity analyses, the study’s findings indicate that digital transformation may inflate operational costs and compromise firm performance. When considering financial restrictions and R&D, the productivity gains emanating from digital transformation, underscores the symbiotic potential of concurrent technological and financial strategies. Heterogeneity analyses reveal a differentiated impact: larger firms and specific sectors, such as technology, witness a significant boost in productivity, whereas state-owned entities and joint ventures are less susceptible to performance downturns.enAttribution 4.0 Internationalhttp://creativecommons.org/licenses/by/4.0/Business & Management3505 Human resources and industrial relations3507 Strategy, management and organisational behaviourChinadual mechanismsdigital transformationfirm performancetext miningArticle1743-792X559679