Digital transformation and the choice of management control modes in enterprise groups
Junhui Li, Xianzhi Zhang
TL;DR
This study shows that digital transformation encourages enterprise groups to adopt decentralized management control, especially in state-owned and uncertain environments.
Contribution
The paper introduces a new framework for measuring management control modes and reveals how digital transformation reduces principal-agent problems.
Findings
Digital transformation promotes decentralized management control in enterprise groups.
The effect is stronger in state-owned enterprises and high-uncertainty environments.
Improved internal control quality mediates the impact of digital transformation.
Abstract
Digital transformation has a significant impact on the choice of management control modes within enterprise groups. This study uses data from publicly listed companies in China from 2010 to 2022 to empirically examine the effect of digital transformation on the management control modes of enterprise groups. It further explores the mechanism and moderating effects of digital transformation in influencing the selection of management control modes. The findings indicate that, under the impact of digital transformation, enterprise groups are more inclined to adopt decentralized management control modes. The mechanism analysis suggests that digital transformation can mitigate principal-agent problems between parent and subsidiary companies by improving internal control quality, thus promoting a decentralized management control mode. The moderating effects reveal that the facilitative impact…
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Taxonomy
TopicsBusiness and Economic Development