The association between CEOs’ foreign experiences and the digital transformation of Chinese firms

Leveraging the upper echelons theory, this paper investigates how CEOs' foreign experiences influence the digital strategic transformation of Chinese firms. The findings suggest a positive correlation between CEOs' foreign experiences and digital transformation. The firm's financialization has a negative moderating effect, while CEO duality and the presence of pressure-resistant institutional investors offer positive moderation. Notably, while financialization dampens digital innovation, pressure-resistant investors counter managerial short-sightedness, thus favoring digital transformation. CEO duality, on the other hand, ensures decisive and swift decision-making. Further analysis differentiates the impact of foreign work experiences from learning experiences on transformation, with the former showing a more significant effect.Interestingly, these effects predominantly apply to state-owned firms and those with fewer financing constraints. These insights extend the upper echelons theory, offering guidance on CEO selection and digital transformation strategies. In this study, the mean of CEOs' foreign experience and the data lagged by one period are selected as exogenous instrumental variables, and the two-stage least squares and PSM methods are utilized to deal with the endogeneity problem; meanwhile, the conclusions are still robust after the robustness test is conducted by adding control variables and carrying out one period ahead of the explanatory variables.