As the digital landscape rapidly evolves, digital transformation has become a crucial driver for economic growth and innovation, particularly within the manufacturing sector. This transformation, rooted in technologies such as big data, blockchain, cloud computing and artificial intelligence, has reshaped the production and service capabilities of manufacturing companies. A recent study by Dr. Xiangpeng Meng and Dr. Xinshu Gong of Shihezi University, published in the journal PLOS ONE, focuses on the impact of digital transformation on the innovation output of manufacturing companies, emphasizing 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 study revealed that digital transformation significantly improves both the quality and quantity of innovation output . The research highlights that digital transformation reduces transaction costs within companies and improves the efficiency of external transactions, thus promoting innovation. “Digital transformation promotes an overall improvement in the innovation output of manufacturing enterprises,” said Dr. Xiangpeng.
Research showed that digital transformation reduces internal transaction costs, such as sales, financial and management 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 improve operational efficiency and reduce costs associated with innovation. For example, the study found that lower internal transaction costs were an important factor in improving innovation performance, allowing companies to support broader and higher-quality R&D activities.
Externally, digital transformation helps reduce costs related to the acquisition of knowledge and innovation resources. It facilitates the search and recombination of innovative knowledge, thus improving the innovative vitality of companies. The digital era requires not only internal resources but also collaborative efforts and value exchange throughout the industrial chain. The study found that digital transformation reduces the dispersion of innovation networks caused by geographical distances and financial limitations, promoting innovation performance by improving the efficiency of external transactions.
One of the most crucial findings is the non-linear relationship between digital transformation and innovation production under different market conditions. The mediation analysis of the study reveals that the influence of digital transformation on innovation production can be attributed to the reduction of internal transaction costs and the improvement of external transaction efficiency. This dynamic is further influenced by competitiveness and market freedom, and digital transformation has a variable impact depending on these factors. In more competitive and free market environments, the benefits of digital transformation in the production of innovation are more pronounced.
The study emphasizes the need for coordinated development of digital infrastructure at both macro and micro levels to reduce transaction costs and foster innovation. Policy recommendations include promoting the development of digital infrastructure and ensuring an enabling market environment to maximize the benefits of digital transformation. As digital technologies continue to evolve, their integration into manufacturing processes will be vital to sustaining economic growth and driving innovation.
In conclusion, the research of Drs. Meng and Gong highlights the important role of digital transformation in improving the innovation output of manufacturing companies. By reducing internal and external transaction costs, digital transformation fosters a more efficient and innovative manufacturing sector, crucial for economic development in the digital age.
Magazine reference
Meng, Xiangpeng and Xinshu Gong. “Digital transformation and innovation production of manufacturing companies: an analysis of the mediating role of internal and external transaction costs.” MORE ONE, 2024. DOI: https://doi.org/10.1371/journal.pone.0296876
About the Author
Dr. Meng Xiangpeng He is a research-oriented academic with interdisciplinary experience. He has a bachelor's degree in engineering and is currently engaged in economic research at Shihezi University. His research interests are diverse and he has a featured article in the interdisciplinary field of econophysics, which is currently in publication. Brief information about this article is as follows: Cite as: Xiangpeng Meng. The principles of physics and the mathematical explanation of supply and demand: returning to the starting point of economic research. Author. July 25, 2023. DOI: https://doi.org/10.22541/au.168942656.62143547/v2
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