This study examines how digital transformation shapes firms’ technological diversification. Using firm-year observations of Chinese A-share listed companies from 2008 to 2023, we combine patent data with annual-report text to measure related and unrelated technological diversification and firm-level digital transformation. The results show that digital transformation significantly promotes related technological diversification, while its effect on unrelated technological diversification is limited and depends on financing conditions. Mechanism tests indicate that digital transformation works through multidimensional knowledge acquisition, collaborative innovation, and business model reconfiguration. Further analysis shows that the effect is stronger among high-tech, non-state-owned, and small firms. We also find asymmetric vertical spillovers along the supply chain: digital transformation promotes suppliers’ related technological diversification but constrains customers’ diversification. These findings suggest that digital transformation reshapes not only innovation intensity but also the structure and direction of firms’ technological trajectories.
Libin et al. (Fri,) studied this question.
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