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Advances in Management and Applied Economics

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Abstract

This paper uses data from listed companies in China from 2007 to 2022 to prove that the increase in trade policy uncertainty has promoted the digital transformation process of Chinese export firms. Through theoretical analysis and empirical testing, we found that the promotion effect of trade policy uncertainty on the digital transformation of Chinese export firms is related to trade costs. Rising trade policy uncertainty has increased trade costs, which in turn has forced Chinese exporters to accelerate their digital transformation. Digital capabilities are used to resolve cost challenges brought about by trade policy uncertainty. In addition, this paper also finds that when trade policy uncertainty promotes the digital transformation of Chinese exporters, foreign investment will significantly strengthen this role, while financing constraints will weaken this role, reflecting the importance of foreign investment. Finally, we found that the increase in trade policy uncertainty reduces the imbalance of digital development levels in industries and regions, promotes the digital transformation of industries and regions with lower digitalization levels, and is conducive to promoting the balanced development of digitalization in industries and regions in a country.

Keywords: trade policy uncertainty, digital transformation, Chinese export firms.