Relationship analysis between executive motivation and digital transformation in Chinese A-Share companies: An empirical study.

ABSTRACT

In the expanding global digital economy, the digital transformation of businesses has become a critical component of modern operations. This study investigates the relationship between executive incentives and the digital transformation in A-share-listed Chinese companies from 2011 to 2020. Using multi-period DID and linear regression models, we analyzed how equity and compensation incentives influence this transformation. We discovered an inverse U-shaped correlation between executive incentive intensity and corporate digital transformation. Additionally, the relationship between compensation incentives and digital transformation is initially non-positive but transitions to a non-linear positive association beyond a certain threshold. Our research also reveals that digital process innovation and digital business expansion mediate the relationship between executive motivation and digital transformation. These findings highlight the importance of appropriate executive rewards in fostering innovative thinking and advancing digital transformation. This study contributes to the understanding of the drivers and effects of digital transformation and the role of equity incentives in governance. It offers valuable insights for companies aiming to accelerate digital transformation, optimize industrial structure, and promote economic development. Based on this study, further research on this issue can be conducted in the future by refining the personality traits, educational background, and cognitive differences of executives.