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ABSTRACT Digital transformation provides enterprises with the momentum for development. This study analyses a sample of Chinese listed companies from 2011 to 2021 to construct a digital transformation index and assess the resource allocation efficiency of the cities in which these companies operate. It empirically investigates the impact of digital transformation on resource allocation efficiency, while addressing issues of heterogeneity. The findings are as follows: (1) digital transformation enhances resource allocation efficiency; (2) it influences this efficiency by optimizing the structure of human capital, fostering enterprise innovation, and mitigating information asymmetries; and (3) the positive impact of digital transformation on resource allocation efficiency is more pronounced in regions with lower per capita income and smaller urban populations, as well as among high‐tech, manufacturing, and state‐owned enterprises in these areas. This study contributes to both theoretical and empirical research on resource allocation efficiency and offers a new perspective on digital transformation. It serves as a reference for policymakers in developing relevant digital policies based on regional contexts, provides a foundation for enterprises to expedite their digital transformation efforts, and establishes the groundwork for future research on the role of digital transformation in promoting development in both developed and developing countries.
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