Temporal orientation theory investigates how individuals and organizations perceive and make decisions based on three temporal dimensions: past, present, and future. This theory categorizes individuals and organizations as past-oriented, present-oriented, or future-oriented. These categories are characterized by reflection on historical events, attention to current circumstances, and planning for future prospects, respectively (Holman and Zimbardo, 2009). Time orientation theory is extensively applied in organizational behaviour, strategic management, marketing, and other domains. Research demonstrates that managers’ temporal orientation significantly influences critical enterprise aspects, including strategic decision-making, resource distribution, and technological advancement (Lumpkin and Brigham, 2011). Specifically, managers with a present-oriented mindset emphasize short-term financial performance and are inclined to implement myopic strategies (Lai et al, 2024). This trend may impede digital innovation, which frequently sustained commitment and ongoing experimentation. In contrast, managers with a future-oriented mindset emphasize long-term planning and investment (Garel, 2017). In recent years, managerial myopia and digital innovation have emerged as focal points in the research on corporate strategy and governance.

Recently, research has challenged the conventional notion that managerial myopia is confined to financial manipulation, unveiling its profound impact on organizational capabilities and social responsibility. Yu et al (2024) used text analysis to quantify the extent of managerial myopia among Chinese publicly listed enterprises. Their findings indicate that a short-term orientation not only directly diminishes R&D investment but also undermines innovation quality by narrowing the scope of patent knowledge and reducing the proportion of substantive innovations (Yu et al, 2024). This effect is particularly pronounced in enterprises characterized by weak supervision, high financing dependence, and significant environmental uncertainty, thereby corroborating the predictions of agency cost theory. Notably, external market pressures can exert paradoxical influences, while equity analysts observe that such pressures can mitigate reductions in R&D expenditures, intensified competition in product markets may compel enterprises to expedite the release of substandard innovations, leading to an “innovation bubble” (Xie et al, 2025). Managerial myopic environmental externalities are well-documented in the field of carbon reduction. Xie et al (2025) constructed an enterprise-level carbon emissions database, demonstrating that each one standard deviation increase in managerial myopia results in a 7.67% rise in carbon intensity. The transmission mechanisms include the stagnation of green innovation, increased customer concentration, and inflexibility in energy consumption patterns (Xie et al, 2025). These findings challenge the traditional theory of shareholder primacy, indicating that short-termism may precipitate systemic ecological risks. Zhang et al (2023) further argue that managerial myopia exacerbates the “green premium” dilemma for enterprises by diminishing the quality of ESG information disclosure and eroding stakeholder trust. Even in the presence of policy incentives, short-term-oriented enterprises tend to favour low-cost environmental protection technologies that offer limited social benefits. In the context of digital transformation, managerial myopia introduces a novel mechanism (Zhang et al, 2023). Lu et al (2024) discovered that, for meeting quarterly earnings targets, management might curtail investments in digital infrastructure, thereby resulting in data silos and system interoperability issues. This finding resonates with the concept of “cognitive inertia” proposed by Gavetti and Levinthal (2000). More critically, Cao et al (2024) conducted a longitudinal study on Chinese manufacturing enterprises, revealing that the fragmentation of digital innovation driven by managerial myopia such as the independent development of non-interoperable modules, has substantially escalated the costs associated with late system integration, thereby accumulating “Digital Debt”. This evidence underscores that short-termism not only hinders technology adoption but also risks misaligning the strategic direction of digital transformation.

The relationship between managerial myopia and digital innovation is not characterized by static opposition, but rather by dynamic adaptation and path dependence. Within the digital ecosystem, the effects of managerial myopia extend from enterprise level to broader network level. Hanelt et al (2021) examined the cases of digital mergers and acquisitions within the automotive industry and discovered that leading enterprises often seek to maintain their short-term market share dominance by acquiring patents to prevent the entry of emerging technologies, thereby inhibiting disruptive innovation by small and medium-sized enterprises (SMEs). Although this strategy may temporarily mitigate competitive threats, it results in technological homogenization across the entire ecosystem, thereby undermining long-term adaptability. Moreover, the transparency and traceability afforded by digital technologies offer novel tools to address managerial myopia Hanelt et al (2021). For instance, blockchain technology mitigates information asymmetry by leveraging immutable transaction records, thereby facilitating the detection of short-term financial manipulation (Chen et al, 2024). Gao et al (2024) examined China’s dividend tax reform and discovered that the real-time monitoring capabilities of Digital Dashboards resulted in an excessive managerial focus on quarterly metrics, thus forming “Data-Driven Myopia”. This paradox is especially pronounced in AI decision-making contexts, although machine learning models have the capability to optimize long-term portfolios, their black-box nature undermines management’s ability to provide strategic explanations. This, in turn, fosters a preference for short-term, more easily explicable outcomes (Alghazali et al, 2023).

As a critical driver for the sustained growth of enterprises, a long-term perspective and a steadfast commitment to investment are at the core of innovation. However, myopic managers frequently lack the necessary patience and willingness to uphold these enduring efforts (Lai et al, 2024). Time-oriented theory holds that myopic managers preserve the status quo rather than proactively pursue innovation and change (Aghamolla and Hashimoto, 2023). Thus, myopic managers are more likely to allocate resources to projects that yield immediate returns and neglect initiatives with longer payback periods despite their significant long-term value. Given that digital innovation, a critical domain in contemporary enterprise competition, typically demands substantial upfront investment and has a prolonged payback period, it is particularly vulnerable to the resource-allocation biases of myopic managers.

Based on considerations of resource allocation, myopic managers tend to favour projects that yield immediate results, leaving digital innovation initiatives struggling to secure adequate resources because of their long-term nature and inherent uncertainty (Mizik and Jacobson, 2007). These findings are further corroborated by Guo et al (2023), who demonstrated that myopic managers tend to allocate enterprise resources to ventures that generate immediate cash flow rather than digital innovation projects that require long-term investment. Consider the case of Nokia, once a leading global manufacturer of mobile phones. During the transition to the smartphone era, Nokia’s management focused excessively on short-term gains, prioritizing traditional mobile phone operations and neglecting the rapidly evolving smartphone market. Thus, while competitors such as Apple and Google introduced groundbreaking smartphone products, Nokia allocated more resources to incremental upgrades of feature phones instead of investing in smartphones and digital innovation initiatives.

Similarly, Dong et al (2024) report that myopic managers often curtail investment in research and development (R&D) and other long-term innovation initiatives to preserve short-term financial performance. For instance, during the 2008 financial crisis, General Motors faced significant short-term financial pressure and consequently slashed its R&D budget, suspending numerous promising projects in new energy and autonomous driving technologies. Simultaneously, competitors such as Tesla intensified their investment in research and development, introducing competitive electric vehicles and autonomous driving technologies. Consequently, General Motors’ competitiveness in the domains of new energy vehicles and autonomous driving technology has progressively diminished, whereas Tesla has swiftly ascended to the position of industry leader.

Myopic managers thus tend to favor incentives measured by short-term performance metrics. From the perspective of myopic managers, an incentive mechanism grounded in short-term performance more rapidly displays efficient management. When employee compensation and promotions depend predominantly on short-term achievements, their actions align with these objectives, thereby emphasizing on the attainment of immediate goals at the expense of long-term strategic development. This shift in focus diminishes the attention and resources dedicated to fostering digital innovation (Bhojraj et al, 2009; Garvey et al, 1999).

Consequently, this research proposes the following research hypothesis:

Hypothesis 1: The myopic perspective of managers negatively affects digital innovation within enterprises.

The myopia of managers is primarily attributed to cognitive biases and the constraints of their decision-making frameworks. Faced with a complex and volatile market, managers might fail to fully and accurately comprehend the market dynamics and long-term trends due to limitations in information-processing capabilities or the rigidity of their cognitive patterns (Czakon et al, 2023). Such cognitive constraint predisposes managers to be unduly swayed by short-term factors when making decisions, often at the expense of long-term strategic considerations. First, myopic managers frequently over-allocated enterprise resources to short-term projects while overlooking the necessary investments for long-term strategies. For instance, to rapidly enhance short-term profits, managers might reduce expenditures on R&D or marketing, which are critical long-term investments for the enterprise’s sustained growth (Lai et al, 2024). This misallocation of resources directly leads directly to a deviation from the original long-term strategic plan, hindering the enterprise’s ability to develop along the intended strategic trajectory. Second, in a rapidly evolving market environment, managerial myopia causes enterprises to overlook the long-term consequences of market dynamics and technological advancements. Managers might over-emphasize the present market demands without anticipating emerging opportunities or challenges (Miller, 2002). This myopic behaviour prevents enterprises from adjusting their strategies to align with the evolving market and technological trends, thereby exacerbating strategic divergence. Furthermore, managers confront a substantial volume of information and intricate scenarios in the decision-making process, so myopic behaviour can result in inadequate information processing and cognitive biases. Owing to the pressures of time and limited resources, managers may be unable to analyse of all available information and therefore opt for simplified and intuitive decision-making approaches (Czakon et al, 2023). This tendency can lead organizations to overlook significant long-term strategic opportunities and pursue short-term market trends without due consideration, thereby causing strategic deviation.

Strategic deviation substantially degrades the digital innovation of enterprises. First, the resource misallocation stemming from strategic deviation results in inadequate resource allocation to long-term strategic investments such as digital innovation (Karlsson and Ahlstrom, 1997), thereby constraining innovation potential through the limitation of sustained developmental momentum. Long-term strategic initiatives suffer, including research and development in new technologies and the exploration of new markets, which necessitate sustained and consistent investment. Strategic deviation can impede these projects due to inadequate funding, thereby constraining the innovative capabilities of organizations (Rahmandad, 2012). Second, strategic deviation undermines the learning mechanisms within an organization. Under the guidance of myopic leadership, organizations may place excessive emphasis on immediate outcomes, thereby neglecting the acquisition of new technologies and the accumulation of knowledge (Vuori and Huy, 2016). This cultural environment not only diminishes opportunities for acquiring new technologies but also erodes the organization’s learning capacity and adaptability, rendering the enterprise ill-equipped to confront emerging technologies and markets. Ultimately, strategic deviation can precipitate cultural discord. The tension between long-term strategic goals and short-term performance metrics can engender internal divisions and conflicts, thereby undermining team cohesion and collaboration (Berthon, 1993), Such situations, in turn, hinder the implementation of digital innovation. Therefore, we propose the following research hypothesis:

Hypothesis 2: Strategic deviation facilitates bridging the gap between managerial myopia and digital innovation within enterprises.

The term “institutions” generally refers to a complex network of social mechanisms encompassing rules, norms, customs, and organizational structures. These elements collectively ensure the stable and orderly functioning of society by constraining and guiding the behaviour of individuals (North, 1991). Institutional and environmental factors significantly influence the advancement of digital innovation. For instance, a systematic review by Hanelt et al (2021) revealed that digital transformation catalyses a transition towards more flexible and adaptable organizational structures. Institutional contexts, including digital business ecosystems, significantly shape this transition.

In the intricate and dynamic business environment, market competition is a critical external factor that enterprises must confront. Market competition not only influences the market position of enterprises but also significantly moulds their decision-making processes and innovation trajectories. Especially in the era of digital transformation, the influence of market competition on digital innovation is particularly important. Digital innovation is a pivotal force that drives enterprise transformation and enhances competitive position, introducing greater uncertainty and pressure into managerial decision-making, due to the high risk and investment involved and the extended time horizon.

First, the intense market competition underscores the pivotal role of digital innovation in enabling companies to attain a competitive edge and ensure sustainable development (Lin et al, 2011). It not only enhances operational efficiency and market competitiveness but also fosters the creation of novel business models and profit opportunities (Boudreaux, 2024). In this context, managers must adopt a long-term perspective and balance immediate interests with long-term strategies, thereby mitigating myopic behaviour (Chalioti and Serfes, 2017). This trade-off process compels managers to reassess their enterprise’s strategic objectives, acknowledging that, although short-term performance is crucial, it does not ensure a sustainable long-term presence in the market. In less competitive markets, survival pressures on enterprises may decrease, leading managers to prioritize short-term performance over long-term innovation. Conversely, in moderately or highly competitive markets, the imperative for enterprises to survive and thrive obliges managers to emphasize digital innovation to establish non-replicable competitive advantages.

Second, digital innovation is critical for enhancing core competitiveness (Im et al, 2015). By leveraging digital innovation, enterprises can construct competitive barriers that are difficult to overcome, thereby distinguishing themselves in the highly competitive market environment. Moreover, market competition increases information transparency, making managerial decision-making more vulnerable to external oversight. Consequently, the adverse impacts of myopic actions, including reduced stock prices and reputational damage, can rapidly manifest (Weiss, 2003). To prevent such adverse outcomes, managers must refine their strategies and emphasize long-term development and innovation. In highly competitive markets, this adjustment may be particularly significant as managers recognize that maintaining a competitive edge in the market requires sustained innovation.

Ultimately, the survival pressures imposed by market competition compel managers to focus increasingly on the prospects and innovative capabilities of their enterprises (Eisdorfer and Hsu, 2011). They recognize that sustained innovation is essential for maintaining a competitive edge in the intense market environment. Consequently, managers become more inclined to assume risks and allocate resources to digital innovation to identify new growth opportunities and secure a strategic advantage (Denicolò and Zanchettin, 2010). This inclination may be particularly pronounced in highly competitive markets, where managers are acutely aware that their enterprise can only adapt to the rapidly evolving market and sustain a competitive edge through continuous innovation.

Given these considerations, the following research hypothesis is hereby proposed:

Hypothesis 3: Market competition mitigates the myopic instincts of managers regarding enterprise digital innovation.

Government subsidies are a significant policy instrument and are frequently perceived as an indication of external endorsement and support; they are extensively used to incentivize and direct enterprises’ innovative endeavours. However, government subsidies exert a complex influence on enterprises’ digital innovation decisions. Government subsidies often instigate a cascade of reactions, particularly at the managerial decision-making level, that impact enterprises’ investments in digital innovation and other strategic choices.

First, government subsidies may bolster managers’ psychological security, thereby diminishing their responsiveness to market fluctuations and competitive pressures. When enterprises receive government subsidies, managers may perceive these funds as an additional safety net, potentially reducing their sensitivity to market dynamics and competitive pressures. This increased psychological security may lead managers to make short-sighted decisions, focusing excessively on immediate performance at the expense of investing in the digital innovation necessary for long-term growth. However, when government subsidies are moderate or low, managers must remain attuned to market dynamics and competitive pressures, forcing them to evaluate digital innovation investments with greater scrutiny.

Second, government subsidies are frequently regulated by a comprehensive framework of institutions and rules intended to ensure the rational allocation and effective oversight of the funds. However, these regulations may inadvertently restrict managerial decision-making autonomy and reduce the flexibility of fund deployment. In the face of such constraints, managers might opt for lower-risk projects characterized by quicker returns to mitigate potential risks and uncertainties (Vanino et al, 2019). In the realm of digital innovation, the development and implementation of novel technologies and models frequently entail significant uncertainties and risks. Consequently, when constrained by the regulation of subsidies, managers are encouraged to show greater caution and thus are more likely to curtail investment in innovative domains and instead redirect resources toward conventional sectors that offer more immediate prospects for enhanced performance.

Ultimately, government subsidies can distort market signals, leading to inefficiencies in resource allocation (Grabowski and Staszewska-Bystrova, 2020). In typical scenarios, market signals form a critical foundation that guides corporate investment. However, the provision of government subsidies may induce enterprises decoupling from market signaling mechanisms in investment decision-making processes, potentially leading to systematic underinvestment in mission-critical domains such as digital innovation due to attenuated market discipline effects. Management may erroneously assume that they can secure the necessary financing through government subsidies without adhering to market indicators, thus overlooking the significance of digital innovation for enhancing core competitiveness and fostering long-term development. In contrast, when subsidies are moderate or low, market signals are more likely to retain their role of guiding enterprise investment decisions. In such scenarios, managers are more likely to emphasize resource allocation in pivotal areas such as digital innovation.

Therefore, we propose the following research hypothesis:

Hypothesis 4: Government subsidies may intensify managerial myopia toward corporate digital innovation.

Economic policy uncertainty (EPU) is the risk of error that firms face when forecasting governmental economic policies. EPU is a significant external factor that influences strategic planning, investment choices, and digital innovation. Particularly in a high-EPU context, the volatility of the market environment poses substantial challenges to the long-term strategic planning of enterprises, compelling managers to address an increasing number of unknown variables and potential hazards.

First, managers adopt a cautious stance and adjust their investment strategies. They are likely to increase prudence and may curtail investments to mitigate policy-related risks (Wang et al, 2024). However, this cautious approach does not imply a complete cessation of investment activity. Alternatively, managers will more rigorously assess diverse investment opportunities, seek strategies to stabilize corporate development amidst uncertainty, recognize the pivotal role of digital innovation in boosting corporate competitiveness, and understand that sustained innovation is the best way to be invincible in the face of intense market competition. Consequently, managers are likely to augment investments in digital technologies and platforms despite the potential lack of substantial short-term returns (Geng et al, 2023).

Second, in the context of a rapidly evolving market, managers acknowledge the critical importance of sustaining flexibility and adaptability. Due to its efficiency, flexibility, and customizable attributes, digital technology has become vital for enterprises to withstand address market fluctuations. Consequently, managers are increasingly inclined to allocate resources to digital technologies to swiftly respond to market dynamics, optimize operational efficiency, and bolster competitive advantage (Xu et al, 2024). To this end, enterprises may reallocate resources to prioritize investment in strategic digital innovation projects. Enterprises can better allocate resources by reprioritizing projects to achieve a stable cash flow and maintain a competitive advantage in an uncertain environment (Sun et al, 2025).

Ultimately, a high EPU environment also presents an opportunity for enterprises to experiment and learn, allowing them to amass the expertise necessary for digital innovation, thereby enhancing the likelihood of successful innovation and allowing them to identify more projects with potential (Feng et al, 2024).

These considerations lead us to propose the following hypothesis:

Hypothesis 5: The perception of economic policy uncertainty mitigates the adverse effects of managerial myopia on corporate digital innovation.

In conclusion, the overarching theoretical framework underpinning this study is depicted in Fig. 1.

This research applies descriptive statistics and a correlation analysis to each variable under investigation. Tables 1,2 list the results.

The mean value of digital innovation (DigInnov) is 0.935, and its maximum is 5.493. This result suggests that most enterprises in the sample undertook some level of digital innovation activities, albeit with considerable variation in intensity among different enterprises. This finding is consistent with the current landscape of digital innovation within Chinese enterprises. The average manager myopia (MgrMyop) score is 0.044, with a relatively small standard deviation of 0.038 and a maximum value of 0.180. These statistics indicate that managers in the sample generally display a low propensity for myopic behaviour.

The results of the correlation analysis indicate that the correlation coefficients for all variables are less than 0.5, suggesting an absence of significant multicollinearity issues within the dataset. Notably, a statistically significant negative correlation appears between digital innovation and managerial myopia, with a correlation coefficient of –0.112 (p 0.01). This finding supports the primary conclusion of this study, which is that managerial myopia impedes corporate digital innovation activities.

This research used a regression analysis based on a time-individual dual fixed-effect model to empirically test the research hypothesis. Tables 3,4 list the results.

The tests validate the accuracy of the model. The R-squared coefficient of determination ranges from 57.8% to 75.8%, indicating that the base model accounts for approximately 75.7% of the variability in the explained variables. The regression analysis in Model (1) reveals that the relationship between the dependent variables and control variables is consistent with the expectations and the literature results discussed in the literature review, both in terms of significance and direction. The regression results of Model (2) reveal a significant negative impact of managerial myopia on digital innovation, as evidenced by the statistically significant regression coefficient of –0.261. The result is statistically significant at a significance level of 5% (p 0.05). This finding provides empirical support for Hypothesis 1 and is consistent with the prevailing industry trend that, in a rapidly evolving market environment, managers who focus excessively on short-term gains tend to overlook long-term investments such as digital innovation. This oversight is likely to undermine the long-term growth potential of their enterprises. At the industry level, such myopic behaviour impedes comprehensive digital transformation efforts, thereby degrading overall competitiveness. This discovery is largely consistent with the findings of existing research (Yu et al, 2024).

The procedure for the causal stepwise regression test method proposed by Baron and Kenny (1986) to examine the intermediary effect consists of three steps: (i) conduct a regression analysis of X on Y and assess the significance of the regression coefficient; (ii) perform a regression analysis of X on M and evaluate the significance of the regression coefficient; (iii) conduct a regression analysis of X on Y after incorporating the intermediary variable M and assess the significance of the combined regression coefficients of X and M. Model (2) serves as the initial testing phase. The regression results of Model (3) reveal that the coefficient for manager myopia on strategy deviation is 0.112, which has statistical significance at the 5% level (p 0.05). This finding suggests that managerial myopia has a significant positive impact on enterprise strategy deviation. In sectors characterized by rapid technological change, such as high-tech industries and internet finance, such strategic deviation likely results in enterprises missing critical market opportunities. The regression results of Model (4) reveal that the coefficient for strategic deviation on digital innovation is –0.109 (p 0.01), while the coefficient for managerial myopia regarding digital innovation is –0.248 (p 0.10). Notably, these coefficients are smaller in magnitude than those of Model (2). This finding suggests that strategic deviation is an intermediary factor in the relationship between managerial myopia and digital innovation, thereby supporting Hypothesis 2. The Bootstrap method was used to further examine the mediating role of strategy deviation, with 5000 Bootstrap samples selected through repeated random sampling. The test results reveal that the indirect effect coefficient’s 95% confidence interval [–0.747, –0.228] which does not include 0, further supporting Hypothesis 2.

The regression results of Model (5) reveal that the cross-multiplication term between managerial myopia and market competition has a significant regression coefficient of 0.017, which is statistically significant at the 5% level (p 0.05). This finding suggests that market competition attenuates the association between managerial myopia and digital innovation. Specifically, as enterprises face more intense market competition, their managers prioritize long-term competitiveness and digital innovation alongside short-term performance objectives. Consequently, the detrimental effect of managerial myopia on digital innovation diminishes, thereby confirming Hypothesis 3. The specific regulatory effects are illustrated in Fig. 2. Enterprises must prioritize long-term competitiveness and digital innovation in a highly competitive market environment to maintain or enhance their market share. While striving for short-term outcomes, managers recognize that sustained innovation is essential for their enterprise to gain a competitive advantage. Consequently, in more competitive markets, the adverse impact of managerial myopia on digital innovation diminishes. This finding is consistent with current industry trends, where enterprises in intensely competitive markets increasingly emphasize technological advancement and long-term strategic development to withstand growing competitive pressures. This is consistent with the research findings of Grabowski and Staszewska-Bystrova (2020), which suggests that excessive competition may lead companies to shift towards low-risk imitative innovation, thereby limiting breakthroughs in original digital technologies.

The regression results of Model (6) reveal a significant and negative correlation between managerial myopia and government subsidies, with a regression coefficient of –0.644, which is statistically significant at the 5% level (p 0.05). This result suggests government subsidies significantly amplify the association between managerial myopia and digital innovation. In other words, receiving larger government subsidies correlates positively with the adverse effects of managerial myopia on digital innovation. Therefore, Hypothesis 4 is confirmed. The effect is illustrated in Fig. 3. Although government subsidies are intended to support the innovation and development of enterprises, in practice, they cause managers to prioritize projects that yield short-term gains. This tendency is particularly pronounced in environments with generous subsidies, where such myopic behaviour is more prevalent, increasing the neglect of digital innovation projects with long-term potential. Consequently, government subsidies may inadvertently exacerbate the negative impact of managerial shortsightedness on digital innovation. This is consistent with Guan’s (2021) research finding that companies receiving high subsidies are more inclined to purchase mature technology patents rather than independently develop them.

The regression results of Model (7) reveal that the cross-multiplication term between managerial myopia and their perception of economic policy uncertainty has a significant regression coefficient of 2.538, and it is significant at a significance level of 1% (p 0.01). This finding indicates that perceived economic policy uncertainty significantly attenuates the association between managerial myopia and digital innovation. In other words, when enterprises perceive greater uncertainty in economic policy, they are more likely to prioritize investments in digital technologies capable of swiftly responding to market changes. Consequently, the detrimental impact exerted by managerial myopia on digital innovation is mitigated, thereby confirming Hypothesis 5. Fig. 4 shows the adjustment effect, indicating that perceived uncertainty in economic policy substantially mitigates the relationship between managerial myopia and digital innovation. When firms perceive such uncertainty, managers tend to recognize the critical importance of maintaining corporate flexibility and adaptability. In anticipation of potential market shifts and policy changes, managers are more likely to prioritize investments in digital technologies that can rapidly respond to market dynamics. This supports Kang and Lee’s (2022) theoretical hypothesis that uncertainty drives strategic flexibility. When EPU rises, companies may break through short-term thinking and increase exploratory investment in digital technology to cope with external environmental changes.

The causal relationship in which managerial myopia affects the digital innovation investment and strategy of enterprises may operate in the opposite direction. That is, the digital innovation activities of enterprises may influence managers’ decision-making vision and long-term orientation, thus establishing a causal feedback relationship. To address concerns about such reverse causality, this research conducted an advanced test (one period in advance) using the dependent variable. The results are presented in Table 5. Specifically, we advanced the data of the dependent variable (enterprise digital innovation) by one period and performed a regression analysis with the independent variable (managerial myopia). This method assumes that the independent variable of the current period does not affect the dependent variable of the previous period, thereby mitigating issues related to two-way causality. Additionally, in real economic activities, managerial decisions often take time to become manifest in enterprise’s digital innovation activities. Simulating this time lag by the independent variable being one period ahead of the dependent variable aligns the model more closely with reality and enables a more accurate estimate of managerial myopia’s long-term impact on an enterprise’s digital innovation. Based on regression results from Model (8), these findings remain consistent with the original hypothesis.

Furthermore, this research uses the average myopia of other managers within the same industry and year as an instrumental variable (IV) to examine the endogeneity of the issue. According to the peer effect theory, when corporate managers formulate investment strategies, their foresight and decisions are frequently influenced by the investment perspectives of their industry peers. Therefore, this variable effectively encapsulates the correlation characteristics of mutual influence within the industry, thereby fulfilling the fundamental requirements for the correlation of instrumental variables. Additionally, given that an enterprise’s decision to transform digitally is a relatively autonomous and intricate strategic choice, it is not directly influenced by the individual investment perspectives of other industry managers. This ensures the logical exogeneity of the selected instrumental variables, meaning a minimal direct correlation exists with the enterprise’s decision to digitally transform, thus mitigating the potential impact of endogenous issues. The results are presented in Table 6. In the initial regression, the Kleibergen-Paap rk Wald F statistic value substantially surpasses the 16.38 critical threshold established at the 10% bias level, indicating a statistically significant relationship between the instrumental variable and the managerial myopia indicator, thereby confirming the absence of weak instruments.

Additionally, the regression coefficient of the instrumental variable (IV) on managerial myopia is –30.148, which is statistically significant at the 1% significance level (p 0.01). In the weak instrumental variable test, the F-statistic is 2261.24, exceeding the threshold of 10, and the minimum eigenvalue statistic is 2535.86. Given that the critical value of 16.38 at the 10% level for the nominal 5% Wald test is greater than the 2SLS size, we conclude, based on empirical criteria, that the instrumental variable is not weak. This result indicates that the selected instrumental variable adequately represents the influence of the original endogenous variable, thus ensuring sufficient identification. In the second stage of the regression analysis, the regression coefficients associated between managerial myopia and digital innovation are uniformly negative and satisfy the threshold for 1% significance. This result indicates that the initial research findings maintain their robustness when potential endogeneity issues are considered, thus confirming that managerial myopia exerts a statistically significant negative influence on corporate digital innovation. Based on regression results from Model (9) and Model (10), these findings remain consistent with the original hypothesis.

The substantial differences between state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs) in terms of ownership structure, business objectives, and decision-making mechanisms may result in variations in managerial myopia and thereby affect digital innovation. To further differentiate how managerial myopia affects the digital innovation of enterprises as a function of ownership structure, I conducted group regressions. The results are presented in Tables 7,8. The regression analysis reveals that the hypothesis testing for the sample of SOEs is largely insignificant, whereas the hypothesis testing for non-SOEs aligns with the initial hypothesis, except for the moderating effect of market competition, which remains insignificant. This result suggests that SOEs may prioritize long-term strategic planning and national interests over immediate financial gains, whereas non-SOEs tend to focus on short-term economic benefits and market competitiveness. Furthermore, SOEs typically enjoy advantages in capital availability, policy support, and other resources, facilitating access to the necessary assets for digital innovation. This resource accessibility advantage may mitigate the adverse effects of managerial myopia on digital innovation. Conversely, non-SOEs are typically owned by individuals or groups, with their primary business objective being the maximization of economic benefits. This singular focus on economic gains may lead non-SOEs to prioritize market signals and short-term returns in their decision-making processes. The moderating effect of market competition on these enterprises is not pronounced, likely due to the complex influence of market competition on digital innovation within non-SOEs. Significant disparities exist among non-SOEs in terms of scale, strength, and resources. Consequently, while some robust non-SOEs can leverage innovation to gain competitive advantages in the market, others may struggle under the pressure of market competition and find it challenging to implement effective digital innovation.

Based on the time-oriented theory, this paper investigates how managerial myopia affects digital innovation. The results lead to the following conclusions:

Managerial myopia hinders digital innovation via the dual mechanisms: short-term interest lock-in and strategic path deviation. Short-term interest lock-in is characterized by an excessive focus on immediate financial returns, which systematically crowds out the long-term resource investments necessary for digital innovation. This allocation preference not only stems from managers’ concerns about their tenure performance but also reflects a cognitive bias known as “time discounting” in organizational decision-making: overvaluing short-term benefits while undervaluing the potential of innovation investments. Strategic path dependency is dynamically perpetuated through strategic deviation: myopic decisions disrupt strategic coherence and trigger a detrimental cycle of “strategic deviation-organizational inertia”. Specifically, strategic deviation persistently suppresses digital innovation by weakening organizational learning capabilities, exacerbating resource misallocation, and intensifying cultural conflicts. This research extends traditional studies on managerial myopia from a static resource perspective to a dynamic strategic process, elucidating how time-oriented imbalances impede digital transformation through self-reinforcing organizational practices.

There exists an “asymmetric adjustment” within the external environment, where the impact of market competition and policy intervention on myopic behaviour exhibits significant disparities. The “survival pressure” induced by market competition strengthens the causal link between short-term survival and long-term competitiveness through the recalibration of managers’ risk perception. Fierce industry competition has compelled managers to regard digital innovation as a pivotal strategy for mitigating alternative threats, thereby partially counteracting the inclination toward short-term thinking. This process substantiates the theoretical logic that competition drives innovation, yet it is crucial to consider its threshold effect. Specifically, when the intensity of competition surpasses the carrying capacity of organizational resources, it may exacerbate short-termism in an adverse manner. The “institutional paradox” associated with government subsidies underscores the double-edged nature of policy instruments: although the subsidy mitigates the resource constraints faced by enterprises, the associated short-term evaluation criteria, signal distortion, and innovation substitution effects reinforce managers’ myopic motivations. This finding challenges the conventional assumption that subsidies invariably foster innovation and underscores the necessity for institutional design to be vigilant regarding the risk of misalignment between incentive structures and the long-term characteristics of innovation cycles. The adjustment of economic policy uncertainty through “crisis perception” further accentuates the complexity of this issue. In an environment characterized by high uncertainty, the growing imperative for managers to foster agility and resilience through digital innovation compels them to reassess the opportunity costs associated with short-termism. This provides novel evidence supporting the theory of “destruction-driven innovation” within a digital context, while also indicating that such effects may be limited by the technological volatility inherent to the industry.

There exists an inherent “system buffer” effect within the nature of property rights, resulting in a relatively weak correlation between managerial myopia and digital innovation in SOEs. This fundamentally entails the institutional correction of individual cognitive biases through mandatory measures. Rigid policy objectives, exemplified by the administrative pressure stemming from the national innovation strategy, alongside the benefits of resource redundancy, such as easy access to low-cost capital and a policy-protected space for trial and error, serve as dual institutional pillars that prevent short-termism from disrupting the strategic agenda. Long-cycle assessment systems, such as tenure flexibility and social benefit weighting, reconfigure the temporal discount rate for managers, encouraging them to view digital innovation as a capital asset for political advancement rather than solely as a means for economic profit. This insight offers critical implications for innovative governance within the context of mixed ownership reform: The “institutional resilience” of SOEs can serve as an effective safeguard against short-termism, however, its efficacy hinges on the dynamic alignment of policy objectives with market mechanisms.

Given considerations, this research leads to the following managerial implications and policy recommendations:

Transform manager mindsets toward long-term orientation. Managers should shift from managerial myopia to a management philosophy oriented towards long-term value creation. The decision-making process must evaluate both short-term and long-term interests to prevent an overemphasis on immediate performance at the expense of the enterprise’s sustained development.

Enhance the long-term strategic planning framework. Enterprises should establish a robust and comprehensive long-term strategic planning system that integrates digital innovation into the core agenda of enterprise development. Clearly defining both long-term and phased objectives can ensure innovation initiatives are closely aligned with the enterprise’s long-term goals, thereby fostering a sustained momentum for innovation.

Enhance market supervision to uphold fair competition. The government should intensify its oversight, combat unfair competitive practices, and preserve a fair, competitive market. The goal should be to foster an optimal external environment for digital innovation, thereby stimulating the innovative capabilities and competitive advantage of enterprises.

Prudently use government subsidies. When subsidizing enterprises, the government should clearly define the intended purposes and limitations of such funds, guiding enterprises in their rational use. Subsidies that enhance short-term financial metrics should be discouraged, whereas subsidies that foster long-term innovation capabilities should be encouraged. When offering financial support and policy guidance, the government must fully respect market mechanisms and avoid excessive interference in enterprise decision-making.

Emphasize the stability and continuity of policies. The government should ensure policy consistency and minimize uncertainty in economic policy on enterprise innovation activities. A stable policy environment gives enterprises greater confidence and positive expectations, thereby promoting the sustainable development of digital innovation.

Enterprises should be categorized based on their nature. The government should provide differentiated guidance to enterprises, promoting innovation tailored to each type of enterprise. SOEs should emphasize long-term strategic planning and increased resource allocation. Non-SOEs should balance short-term and long-term interests, enhance external partnerships, and boost their competitive advantage. Simultaneously, efforts should be made to ensure fair competition and prevent monopolistic practices.

Although this study offers a novel theoretical framework for comprehending the relationship between managerial myopia and digital innovation, several limitations remain that warrant further investigation in future research.

The generalizability of the research conclusions may be limited by China’s unique institutional and cultural context. First, The Chinese government has actively engaged in fostering enterprise innovation through the implementation of industrial policies and the advancement of SOE reforms. This is fundamentally different from economies dominated by free markets. For instance, the government’s strategic goal setting for SOEs may systematically mitigate managerial myopia, but such institutional dependencies may lack corresponding mechanisms in other countries. Second, the hierarchical authority and collectivist tendencies prevalent in Chinese organizations may exacerbate managerial inertia towards myopic decision-making, whereas a flatter governance structure in low power distance cultures may produce different moderating effects. Third, the long-term orientation embedded in traditional Chinese culture may partially counterbalance the myopic tendencies of individual managers, this cultural characteristic could significantly alter the interaction dynamics between variables in societies dominated by short-term orientations.

Data and methodological limitations. First, this study primarily relies on data from A-share publicly listed enterprises, which limits its applicability to SMEs and start-ups who may exhibit more pronounced managerial myopic behaviors due to greater resource constraints. Second, the measurement of variables such as “government subsidies” and “market competition” does not fully account for the intricacies of China’s transitional economy, including the varying degrees of local government competition and the prevalence of implicit subsidies. Third, the data spans from 2010 to 2023 are a period marked by the intensive introduction of digital economy policies in China. Consequently, the conclusions may be influenced by stage-specific policy impacts, making it challenging to reflect long-term cyclical trends.

In the future, this research can be expanded to analyse the differential impact of managerial myopia on digital innovation in diverse contexts and explore additional positive factors that foster digital innovation. Simultaneously, scientifically sound government policies must be devised that effectively incentivize enterprise innovation, without exacerbating managerial myopia. Such continuous and in-depth research should help enterprises achieve sustained long-term innovation and development.