ICDEIT 2025: International Conference on Digital Economy and Information Technology – 05 March 2026
A Study on the Impact and Marginal Effects of Digital Transformation on Outward Foreign Direct Investment
Authors: SANXI CAI, YANGLI SHU
This research investigates how digital transformation influences outward foreign direct investment, drawing on data from A-share listed companies spanning from 2011 to 2023. The results demonstrate that digital transformation boosts outward foreign direct investment, and this conclusion holds up well after undergoing multiple robustness checks. Further heterogeneity analysis shows that the link between digital transformation and outward foreign direct investment is stronger for state-owned enterprises, companies located in central and western regions, and those with lower marketization scores. This study adds to the current body of knowledge regarding the interplay between digital transformation and outward foreign direct investment, offering theoretical perspectives to support the promotion of corporate digital transformation and the acceleration of establishing a high-standard opening-up framework.
Executive Impact: Key Findings at a Glance
The study analyzes how digital transformation (DT) impacts Outward Foreign Direct Investment (OFDI) using A-share listed companies data from 2011-2023. Key findings include a significant positive effect of DT on OFDI, robust across various checks. The impact is stronger for state-owned enterprises, firms in central/western regions, and those in lower marketization environments. This suggests DT helps overcome competitive disadvantages and institutional constraints for certain firms.
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OFDI Growth due to DT
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Observation Count
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Robustness Checks
Deep Analysis & Enterprise Applications
Select a topic to dive deeper, then explore the specific findings from the research, rebuilt as interactive, enterprise-focused modules.
Methodology
The research uses A-share listed companies from 2011-2023. OFDI is measured by the number of investments. Digital Transformation is quantified via keyword frequency in annual reports. Multiple control variables are included, and regression models are used for analysis. Robustness checks include alternative variable measurements and lagged regressions.
Enterprise Process Flow
Identify A-share listed firms (2011-2023)
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Extract OFDI data (CSMAR)
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Extract Digital Transformation keywords (annual reports)
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Construct Digital Transformation Index
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Collect Control Variables
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Regression Analysis (Hypothesis Testing)
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Robustness Checks (Measurement & Lagged)
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Heterogeneity Analysis
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Total Observations Analyzed (firm-year observations)
The study utilized a comprehensive dataset of 37,550 firm-year observations from A-share listed companies, providing a robust foundation for empirical analysis. This extensive sample size enhances the statistical power and generalizability of the findings.
Key Findings
Digital transformation significantly promotes outward foreign direct investment (OFDI). This effect is robust and consistent across different measurement methods and lagged analyses. The promotional effect varies across firm types and regions.
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Digital Transformation Coefficient on OFDI (p<0.01)
Regression analysis (Table 4, Column 2) shows that Digital Transformation has a highly significant positive coefficient (0.426, p<0.01) on OFDI, confirming Hypothesis 1 that digital transformation boosts corporate foreign direct investment.
| Factor | Stronger Impact For | Key Implication |
|---|---|---|
| Ownership Structure | State-owned enterprises (SOEs) |
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| Marketization Level | Regions with lower marketization |
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| Regional Differences | Central and western regions |
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Practical Implications
For corporate leaders, digital transformation is a strategic asset for global expansion. Policymakers should support digitalization strategies, especially for SOEs and firms in less-developed regions, to align with national opening-up goals.
Strategic Digital Investment for Global Reach
A leading manufacturing SOE, facing increasing domestic competition, embarked on a comprehensive digital transformation journey. By implementing advanced data analytics and AI-driven supply chain management, it gained deeper insights into overseas market demands and optimized logistics. This strategic shift enabled the SOE to identify new investment opportunities in emerging markets and successfully establish production hubs, increasing its OFDI by 15% over two years and significantly improving its global market share.
Takeaway: Digital transformation is not just about efficiency, but a crucial enabler for market intelligence, risk mitigation, and competitive advantage in international expansion. This is particularly vital for SOEs leveraging their inherent resource advantages.
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Significance Level for DT on OFDI
The consistent statistical significance at the 1% level across multiple tests (Tables 4 and 5) underscores the strong and reliable positive impact of digital transformation on outward foreign direct investment.
Calculate Your Potential AI-Driven ROI
Estimate the potential annual operational savings and reclaimed hours your enterprise could achieve by implementing AI-driven digital transformation, as suggested by the research findings.
Estimated Annual Savings
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Annual Hours Reclaimed
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Your Digital Transformation Roadmap
A phased approach to integrate digital transformation effectively for enhanced outward foreign direct investment.
Phase 1: Digital Readiness Assessment & Strategy Definition
Evaluate current digital infrastructure, identify key transformation areas aligned with OFDI goals, and define a clear digital transformation roadmap. Focus on data governance and analytics capabilities.
Phase 2: Pilot Implementation & Data Integration
Implement pilot digital solutions in specific international business units or functions. Integrate data across domestic and international operations to build a unified view for OFDI decision-making.
Phase 3: Scaled Deployment & Capability Building
Scale up successful pilot programs across the enterprise. Invest in talent development for digital skills and foster a culture of data-driven decision-making for international expansion.
Phase 4: Continuous Optimization & Global Ecosystem Integration
Continuously monitor and optimize digital transformation initiatives. Explore advanced technologies like AI and blockchain for enhanced international collaboration and supply chain resilience.
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