Variable names and definitions
| Variable type | Variable name | Variable symbol | Variable definition |
|---|---|---|---|
| Mediating variable | Human capital structure | Hcs | Percentage of employees with a bachelor’s degree or above |
| Internal control costs | Icc | Ratio of administrative expenses to operating income | |
| Investment decision quality | Idq | Residual estimation in the regression model of corporate investment on sales growth rate | |
| Independent variable | Digital transformation | Digital | Total word frequency of digitalization-related terms in the firm divided by the length of the MD&A segment of the annual report, multiplied by 100 |
| Dependent variable | Explore innovation | Explore | Natural logarithm of the number of invention patent applications plus 1 |
| Exploit innovation | Exploit | Natural logarithm of the sum of utility model and design patent applications plus 1 | |
| Ambidextrous innovation balance | Balance | |Explore-Exploit| | |
| Control variables | Firm age | Age | Natural logarithm of the firm’s time on the market plus 1 |
| Solvency | Lev | Gearing ratio | |
| Shareholding concentration | Top1 | Proportion of shares held by the first largest shareholder | |
| Ratio of independent directors | Indep | Ratio of independent directors to the total number of board members | |
| Cash flow | Cash | Net cash flow from operating activities / total assets | |
| Company growth | Grow | Operating revenue growth rate | |
| Dual | Dual | Chairman and general manager take the value of 1; otherwise, 0 | |
| Fixed | Fixed | Ratio of fixed assets to total assets | |
| Board size | Board | Natural logarithm of the number of the company’s board of directors |
| Variable type | Variable name | Variable symbol | Variable definition |
|---|---|---|---|
| Mediating variable | Human capital structure | Percentage of employees with a bachelor’s degree or above | |
| Internal control costs | Ratio of administrative expenses to operating income | ||
| Investment decision quality | Residual estimation in the regression model of corporate investment on sales growth rate | ||
| Independent variable | Digital transformation | Total word frequency of digitalization-related terms in the firm divided by the length of the MD&A segment of the annual report, multiplied by 100 | |
| Dependent variable | Explore innovation | Natural logarithm of the number of invention patent applications plus 1 | |
| Exploit innovation | Natural logarithm of the sum of utility model and design patent applications plus 1 | ||
| Ambidextrous innovation balance | |||
| Control variables | Firm age | Natural logarithm of the firm’s time on the market plus 1 | |
| Solvency | Gearing ratio | ||
| Shareholding concentration | Proportion of shares held by the first largest shareholder | ||
| Ratio of independent directors | Ratio of independent directors to the total number of board members | ||
| Cash flow | Net cash flow from operating activities / total assets | ||
| Company growth | Operating revenue growth rate | ||
| Dual | Chairman and general manager take the value of 1; otherwise, 0 | ||
| Fixed | Ratio of fixed assets to total assets | ||
| Board size | Natural logarithm of the number of the company’s board of directors |
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