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<p>Despite the growing emphasis on digital transformation (DT) in society and industries, the reasons why incumbent firms strategically respond to this trend in diverse ways remain unclear. Drawing on optimal distinctiveness theory, we identify two distinct responses to DT: <i>digital investment</i>, which reflects substantive actions by firms to meet differentiation requirements, and <i>digital disclosure</i>, which illustrates symbolic behavior adopted by firms in the face of conformity pressure. We posit that entrepreneurial orientation (EO) can enhance both digital investment and digital disclosure. However, these effects may be contingent upon political connections (PCs). To assess our hypotheses, we analyze a panel dataset comprising Chinese publicly listed firms spanning the years 2009 to 2018. Our findings suggest that responses to DT are influenced by an entrepreneurial drive. Moreover, firms with a high level of political connections may shift from strategic balance to strategic trade-off. Our study contributes to the literature on DT, EO, PCs, and optimal distinctiveness theory.</p>

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Substantive investment or symbolic disclosure toward digital transformation? The impact of entrepreneurial orientation and political connections

  • 期刊论文

  • 发表日期：

    2026年2月20日

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  • Linqing Liu,
  • Zhibin Li,
  • Qing Zhu

摘要

Despite the growing emphasis on digital transformation (DT) in society and industries, the reasons why incumbent firms strategically respond to this trend in diverse ways remain unclear. Drawing on optimal distinctiveness theory, we identify two distinct responses to DT: digital investment, which reflects substantive actions by firms to meet differentiation requirements, and digital disclosure, which illustrates symbolic behavior adopted by firms in the face of conformity pressure. We posit that entrepreneurial orientation (EO) can enhance both digital investment and digital disclosure. However, these effects may be contingent upon political connections (PCs). To assess our hypotheses, we analyze a panel dataset comprising Chinese publicly listed firms spanning the years 2009 to 2018. Our findings suggest that responses to DT are influenced by an entrepreneurial drive. Moreover, firms with a high level of political connections may shift from strategic balance to strategic trade-off. Our study contributes to the literature on DT, EO, PCs, and optimal distinctiveness theory.