Corporate digital transformation and strategic investments of construction industry in China

Abstract

Along with industrial revolution and upgrading technologies, all industries are changing their tradition ways of operation and management. However, the expanding construction industry is way behind this technological transformation. Traditional ways of design and operation have become obstacles in its transforming process. Construction industry has played indispensable role in China's economic growth for past decades, but now it should advance with the times. Recently, industrial enterprises have begun to adopt new concepts like digital construction and parametric design. But there still lacks evaluation on effectiveness of digital reform on construction enterprises. Therefore, this paper takes advantage of 2007-2018 panel data of construction industry in China, applies textual analysis to measure digital reform, and empirically testifies the effect of digital reform on strategic investments of construction enterprises. Results show that digital reform significantly increases corporate strategic investments, including R&D inputs and innovation outputs. This paper also discloses vital mechanism behind, namely, management foresight. Besides, we show that effect is stronger in districts with healthier relationships between enterprises and local governments. Corporate competence and future potential are also strengthened consequently. This paper provides empirical evidence about effect of digital reform on construction industry, and points out a possible direction for further industrial reform.

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