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The digital innovation dilemma: A double-edged sword for employment and competitiveness
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DOI：10.1016/j.jik.2026.101113.png)
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Abstract
En 中文
Enterprise digital innovation has a dual effect on employment, functioning as a double-edged sword for corporate competitiveness. While it fosters certain dimensions of employment expansion, it also triggers significant structural shifts that reshape competitive dynamics. This study uses data from China’s A-share listed companies (2010–2024), integrating six indicators across four dimensions to measure the breadth and depth of digital innovation through text and principal component analysis, and revealing its intricate effects on employment. Digital innovation primarily drives overall employment growth through expanding firms’ innovation boundaries and enhancing their sustainable development capabilities. A relevant result is identifying the heterogeneous effects across different sectors and professional groups wherein the employment-promoting effects are more pronounced during firms’ growth and maturity stages, rather than the startup phase, and are significant for nonstate-owned enterprises and competitive industries, rather than in state-owned enterprises or monopolistic sectors. Notably, digital innovation is associated with reducing employment in routine occupations and increasing nonroutine roles. These findings demonstrate the strategic dilemma faced by firms in which leveraging digital innovation for competitive advantage requires carefully navigating its complex repercussions on employment structure and scale. This study provides critical insights for developing adaptive labor market policies in the era of digital innovation, with significant reference value for distinct enterprises, various corporate lifecycle stages, and professionals across diverse occupations.
Keywords:
Digital innovation
Employment
Routine occupations
Nonroutine occupations
J23
J24
O33
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