Abstract

The paper focuses on the digitalization of state-owned enterprises (SOEs) in two interrelated spheres, which are the systems of organization and the dynamism of change. To investigate the effect of leadership commitment, digital infrastructure, and organizational agility on the outcome of transformation, a structural equation model (SEM) is formulated. This model is built upon the responses to a survey conducted with 120 Chinese SOEs working within the manufacturing, energy and transportation sectors. The results suggest that the effectiveness of the transformation depends on the direct and indirect effects of the leadership commitment when the digital infrastructure is implemented. Organizational agility positively moderates the relationship between digital infrastructure and transformation outcomes. To capture the temporal dynamics of digital transformation, a system dynamics (SD) model is presented, in which long-term consequences of digital investment on company performance may be simulated. As the results of the simulation show, the benefits of digital investment do have the qualities of being delayed, accumulative and non-linear. Although short-term gains remain limited, the benefits become increasingly evident over time as digital capabilities accumulate. Through this combination of SEM and SD, the study reveals the internal organizational mechanisms and evolutionary logic underlying the digital transformation of SOEs.

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