ABSTRACT

Enterprise digital development is an important part of the development of China’s digital economy, and in the context of uncertainty normalization, enterprise digital transformation empowers enterprises to cope with all kinds of economic challenges with increasing prominence. The article empirically investigates the role of economic policy uncertainty on enterprise digital transformation based on the data of China’s EPU index and A-share listed enterprises from 2010 to 2022. The results show that the growth of economic policy uncertainty promotes firms’ digital transformation; the study of the transmission mechanism finds that economic policy uncertainty leads to an increase in employee compensation and thus promotes firms’ digital transformation; at the same time, the tone of the management affects the transmission results; and the results of the heterogeneity analysis show that the promotion effect of economic policy uncertainty is cut down in the state-owned enterprises, and in firms where the directors and supervisors have more financial background. Therefore, this paper is of positive significance for the sound development of enterprises and their adaptation to the economic situation of the times.