With the rapid development of the digital landscape, digital transformation has become a key driver of economic growth and innovation, especially in the manufacturing industry. This transformation stems from technologies such as big data, blockchain, cloud computing and artificial intelligence, which have reshape manufacturing companies’ production and service capabilities. A recent study by Dr. Xiangpeng Meng of Shihezi University focused on the impact of digital transformation on manufacturing companies’ innovative outputs, highlighting the role of internal and external transaction costs.
Dr. Meng and Dr. Gong analyzed data from manufacturing companies listed on the Shanghai and Shenzhen Stock Exchanges from 2012 to 2022. Their research shows that digital transformation significantly improves the quality and quantity of innovative outputs. The study emphasizes that digital transformation will reduce transaction costs within the company and increase external transaction efficiency, thereby promoting innovation. “Digital transformation has promoted overall improvements in manufacturing companies’ innovative outputs,” said Dr. Xiangpeng.
Research shows that digital transformation reduces internal transaction costs such as sales, financial and administrative costs. These reductions allow companies to allocate more resources to research and development, thereby improving innovation performance. By optimizing traditional processes and leveraging digital technologies, companies can increase operational efficiency and reduce costs associated with innovation. For example, the study found that lower internal transaction costs are an important driver for improving innovative performance, enabling companies to support broader and higher-quality R&D activities.
Externally, digital transformation helps reduce costs associated with access to innovative knowledge and resources. It promotes the search and reorganization of innovative knowledge, thereby enhancing the company’s innovative vitality. The digital age not only requires internal resources, but also collaborative efforts and value exchanges along the industry chain. Research has found that digital transformation reduces the dispersion of innovation networks caused by geographical distance and financial constraints, thereby promoting innovation performance by improving external transaction efficiency.
One of the most critical findings is the nonlinear relationship between digital transformation and innovation output under different market conditions. The mediation analysis of the study shows that the impact of digital conversion on innovation output can be attributed to reduced internal transaction costs and improved external transaction efficiency. This dynamic is further affected by market competitiveness and market freedom, and digital transformation will have different effects based on these factors. In a more competitive and free market environment, the benefits of digital transformation to innovative output are more obvious.
The study highlights the coordinated development of digital infrastructure at the macro and micro levels to reduce transaction costs and promote innovation. Policy recommendations include promoting the development of digital infrastructure and ensuring a favorable market environment to maximize the benefits of digital transformation. As digital technologies continue to evolve, their integration into the manufacturing process is crucial to maintaining economic growth and driving innovation.
In short, the research of Dr. Meng and Dr. Gong highlights the important role of digital transformation in enhancing the innovative output of manufacturing companies. By reducing internal and external transaction costs, digital transformation promotes a more efficient and innovative manufacturing industry, which is crucial to economic development in the digital age.
Journal Reference
Meng, Xiangpeng and Xinshu Gong. “Digital Transformation and Innovation Outputs of Manufacturing Companies – An Analysis of the Intermediate Role of Internal and External Transaction Costs.” PLOS ONE, 2024. DOI: https://doi.org/10.1371/journal.pone.0296876
About the Author
Dr. Meng Xiangpeng He is a research-oriented scholar with an interdisciplinary background. He holds a bachelor’s degree in engineering and currently works in economic research at Shihezi University. His research interests are diverse, and he has an outstanding paper in the interdisciplinary field of ecological botany, which is currently being published. The brief information about this article is as follows: Quote: Xiangpeng Meng. Physical Principles and Mathematical Interpretation of Supply and Demand – Return to the starting point of economic research. author. July 25, 2023. Doi:
