Given the rapid advancement of IT, companies worldwide are actively participating in digital transformation and making significant investments in and use of IT. Digital transformation not only improves sales and productivity (Baldwin, 2018; Mithas et al., 2012), but also alters the operational strategies of companies (Schwertner, 2017). Companies may use digital technology to modify their products, processes, and corporate structures to effectively adapt to market fluctuations and meet customer demands (Matt et al., 2015). These improvements could help organizations better adapt to market competition and offer upgraded products and services (Kleis et al., 2012). Investing in IT leads to enhanced productivity and innovation. Due to the importance of IT in driving future economic competition (Bakos and Treacy, 1986; Lee et al., 2018), both government and corporate entities have increased their investment and efforts in its development (Gu et al., 2021; Tallon et al., 2019).

Currently, researchers are conducting numerous studies to investigate the impact of corporate IT investment on business performance. However, the substantial investment, lengthy implementation process, elevated risk of failure, and demanding maintenance and training skill prerequisites associated with IT investment have sparked an ongoing scholarly discussion regarding whether IT investment truly enhances business performance for organizations. Several studies have demonstrated that investments in IT have a substantial favorable impact on the performance of organizations (Chege et al., 2020; Pan et al., 2023). Additional research has indicated that when companies invest in IT, it does not lead to substantial improvements in their performance (Ortagus et al., 2018; Van Ark, 2016). In some cases, it may even have a detrimental impact on companies (Polák, 2017). Thus, academia lacks a universally acknowledged theoretical framework to elucidate the relationship between corporate IT investment and business performance.

Additionally, there are disparities in the research conducted by international and Chinese experts regarding the performance of IT investments. International researchers mostly examine firms in developed countries in Europe and the United States (Campbell, 2012), whereas Chinese scholars tend to concentrate on enterprises within a specific region or industry (Gu et al., 2021; Zeng and Lu, 2021). Furthermore, there is a dearth of validation studies conducted by international experts on underdeveloped countries. Chinese scholars’ research on industrialized countries also lacked a thorough analysis and interpretation that took into account the differences between them. International researchers have employed various approaches to validate or replicate research findings, whereas Chinese scholars have predominantly relied on regression analysis. The similarity in research methods and data across studies increases the likelihood of biased conclusions. Research conducted in developed countries mostly concentrates on three key areas: financial performance, stock market performance, and the operational performance of organizations. On the other hand, Chinese research primarily concentrates on financial success, leaving other areas less explored. Although there are variations, the majority of scholarly research indicates that investing in corporate IT has a beneficial effect on company performance. Therefore, the present study introduces the research hypothesis H1.

H1: Corporate IT investment has a positive impact on firm performance.

Corporate culture encompasses the collective values and behavioral norms that exist within a company (Graham et al., 2022). Cultural transmission refers to the spread and continuation of shared ideas, rituals, traditions, and habits throughout different generations. A company’s shared ideas shape its core attributes and cultivate a distinctive mindset that distinguishes it from competitors (Molenaar et al., 2002). Corporate culture includes various elements within a company, including norms, values, knowledge, and customs (Gorton et al., 2022). The combination of these traits creates a distinct cultural environment that influences several parts of the company, such as employee behavior, communication strategies, and decision-making processes (Schein, 2009). Research has further demonstrated that companies allocate resources to IT investments based on their corporate culture (Cronqvist et al., 2007; Davison and Martinsons, 2003; Harrington and Guimaraes, 2005). The fundamental values and principles of corporate culture have a significant impact on attitudes and decisions about the allocation of resources to IT expenditures. As a result, this influence affects the direction, scope, and methods used in implementing these investments. However, the implementation of IT investments also impacts the business culture. Investing in IT infrastructure enhances the quality and basic competitiveness of a company’s culture by implementing cutting-edge technology and management approaches. Therefore, corporate culture and IT investment development have a linked and mutually influential relationship (Murphie and Potts, 2017), necessitating comprehensive research and investigation.

Currently, the inquiry into the relationship between IT investment and business culture in other nations is rather comprehensive and has yielded significant results. The main objective of this research is to examine the impact of IT investment on company culture and the reciprocal relationship between corporate culture and IT investment in industrial nations, specifically in Europe and the United States (Gallivan and Srite, 2005). Lyons et al. (2007) have shown that culture influences the degree of attention and dedication exhibited by members of a company towards IT investment. Also, they found that the decisions regarding IT investment made within the corporate culture may have a substantial effect on employee performance (Shamsudin and Velmurugan, 2023). Leidner and Kayworth (2006) did a research investigation. Interactions between diverse user groups and IT staff might result in cultural conflicts due to their contrasting values and IT values. Managers may reduce conflict by promoting a common set of IT values. However, gaps exist in current research. First, most studies are grounded in Western organizational contexts, lacking examination of emerging economies like China, where cultural characteristics (e.g., family-oriented values, relationship-centric practices, and government influence) may substantially modify the mechanisms linking IT investment to firm performance. Second, existing literature provides limited empirical exploration of how cultural intensity moderates the IT investment performance relationship, particularly through nuanced analysis of contextual boundary conditions. Moreover, the interplay between institutional factors (e.g., state policies) and culturally embedded organizational behaviors in shaping IT resource allocation decisions remains underexplored, creating critical knowledge gaps for both theoretical development and cross-cultural management practice.

Corporate culture in China demonstrates major differences in comparison to that of other countries. Traditional values heavily influence the culture, which prioritizes the significance of family (Combs et al., 2020). Family members play crucial roles in the organization. This familial position leads to a narrower power structure and decision-making process within Chinese institutions. Generally, family members play significant roles in management, with elder family members frequently shaping and influencing key decisions. Chinese corporate culture highly values interpersonal relationships and social networks (Flora Hung, 2004). Chinese organizations may exhibit a “guanxi” culture, which may lead to managerial employees participating in extra-role activities (Zhou et al., 2020). Similarly, the Chinese government wields a substantial impact on the corporate culture of Chinese enterprises (Tang and Li, 2009). Government regulations greatly influence the expansion of enterprises, their market entry capabilities, and the competitive landscape. These factors have a significant impact on a firm’s decision-making processes and operational strategies.

Cultural diversities are unavoidable, yet they can impact the productivity or efficacy of a firm (Adamczyk, 2017). China’s state-owned businesses (SOEs) strive to both generate earnings and fulfill their responsibilities to society by ensuring employment stability (Lin et al., 2020). Therefore, when it comes to investing in IT and developing infrastructure, companies may also take into account other factors, such as improving working conditions for their employees or generating more job possibilities for the wider society. The comprehensive analyses of Chinese corporate culture have deepened our comprehension of Chinese organizations while confirming the distinctions between Chinese and Western corporate cultures. This paper presents the research hypothesis H2, which is based on the previously conducted study.

H2: Corporate culture intensity positively moderates the relationship between corporate IT investment and firm performance.

Business culture commonly views innovation, honesty, and trust as distinctive components (Bao et al., 2024; Frankel, 2005). Maslow (1943) introduced a theory that hierarchically organizes five distinct types of needs. The hierarchy progresses in a step-by-step manner, starting with the fulfillment of fundamental physiological requirements and culminating in the satisfaction of psychological needs. Furthermore, this progression extends beyond material needs to spiritual needs. This theory provides a theoretical justification for our understanding of the complex process of constructing corporate culture. Utilizing Maslow’s hierarchy of needs theory, we propose a three-level framework of corporate culture, known as the Financial, Strategic, and Value (FSV) corporate culture model (Wang, 2014). The concept categorizes corporate culture into three distinct levels: the financial level, the strategy level, and the value level. The financial level serves as the fundamental basis for establishing corporate culture. This level primarily emphasizes the economic prowess and material infrastructure of the firm, which are essential to ensuring the long-term and steady development of enterprise culture. Furthermore, the strategic level undergoes constant refinement and enhancement as corporate strategic goals are achieved. By establishing precise strategic objectives and embracing cultural concepts, the firm can effectively maintain its dominant position during intense market competition. The value-level culture is the fundamental aspect of company culture, encompassing creativity, integrity, and trust across the entire organization.

The emergence of the information economy and the rapid advancements in technology, along with the growing global rivalry, have highlighted the significance of innovation in company strategy (Gilbert, 1994). Innovation has a crucial role in enabling enterprises to attain sustained growth, establish a competitive edge (Igartua et al., 2010), and mold their organizational structures (Hogan and Coote, 2014). In a progressively competitive environment, companies use innovation as a strategy to explore new avenues of expansion by developing, optimizing, and integrating resources. Corporate culture influences the innovative behavior of firms (Naranjo-Valencia et al., 2016). Empirical research consistently demonstrates that a corporate culture of innovation has a favorable effect on business performance (Aksoy, 2017; Tang et al., 2020). Nevertheless, certain research has indicated that the correlation between the culture of corporate innovation and the performance of a corporation could be feeble or even adverse (Tarafdar et al., 2015). These diverse findings indicate that the connection between corporate innovation culture and company performance is intricate, and there may exist numerous unidentified aspects that require further comprehensive investigation and exploration. The FSV corporate culture hypothesis posits that innovation is a fundamental component that mirrors corporate ideals. Consequently, this article introduces hypothesis H3a.

H3a: The degree of corporate innovation culture positively moderates the relationship between corporate IT investment and firm performance.

Integrity is an essential component of corporate culture and plays an important role in a firm’s long-term success and expansion (Koehn, 2005). Peng and Wei (2020) discovered that when management showed greater integrity, employees were more inclined to express their opinions. In their study, Guiso et al. (2015) found that 85% of companies in the Standard & Poor’s 500 (S&P 500) had a corporate culture. Among these organizations, 80% emphasized the importance of innovation, while 70% highlighted the significance of integrity. An organizational culture that prioritizes corporate integrity influences the conduct and principles of its personnel, resulting in decreased costs associated with coordinating company strategies. A firm invests in corporate integrity to prevent potential violations or ethical lapses, thereby avoiding fines (Fuerst and Luetge, 2023).

The influence of corporate culture on business performance is significant (Kotter and Heskett, 1992). A strong corporate integrity culture is critical in business operations because it reduces the company’s external transaction costs (Jiang et al., 2019) and enhances operational efficiency and performance levels. Companies that possess a culture of integrity not only demonstrate outstanding corporate social responsibility (CSR) performance (Wan et al., 2020), but also have the potential to generate higher profits (Hsu, 2007). On the other hand, companies that lack strong ethical values are more likely to encounter issues with safety inspections and financial restatements (Altamuro et al., 2022). The FSV corporate culture hypothesis posits that integrity is a fundamental component that mirrors corporate ideals. Therefore, this paper suggests hypothesis H3b.

H3b: The degree of corporate integrity culture positively moderates the relationship between corporate IT investment and firm performance.

The process of relational interaction, which revolves around customer trust, significantly influences the establishment of commercial connections. This, in turn, plays a crucial role in shaping customer loyalty towards a brand (Sharma et al., 2020). When evaluating brand trust, people closely observe the actions and behavior of companies that hold the brand, particularly their ethical conduct towards consumers. This includes the company’s commitment to integrity, which is a crucial factor in establishing trust (Mal et al., 2018). The internal trust culture of a firm has a significant role in influencing external perceptions and shaping the firm’s image (VanDerMerwe and Puth, 2014). A culture of corporate trust, established within an organization’s internal governance, promotes mutual trust between employees and the organization, fostering teamwork and effective communication. This, in turn, leads to substantial enhancements in organizational performance (Audi et al., 2016). Within the context of external transactions, this culture efficiently decreases the expenses associated with supervision, information search, and information imbalance, resulting in the optimization and reduction of transaction costs (Jiang et al., 2019). This culture significantly bolsters the market competitiveness of enterprises.

Furthermore, a corporate culture that fosters trust significantly affects a company’s day-to-day actions and indirectly influences its decisions about IT investments (Dovey, 2009). Corporate trust fosters the sustainable development of an organization by promoting self-awareness and fostering innovation (Zhang et al., 2022). On the other hand, a corporate culture based on moral contracts fosters a trust atmosphere that strengthens adherence to behavioral standards and moral boundaries within the firm (Husted, 1998), thereby facilitating the alignment and elevation of organizational values. Finally, the corporate culture of trust encourages and limits one another, shapes the behavioral tendencies and value systems of corporate leaders and staff, and improves overall corporate performance. According to the FSV corporate culture hypothesis, trust is one of the core elements that embody corporate values, so this paper presents the H3c assumption.

H3c: The degree of corporate trust culture positively moderates the relationship between corporate IT investment and firm performance.

This study involved screening the original research sample of A-share manufacturing listed businesses in China from 2013 to 2022. The screening process included rejecting samples of ST and *ST enterprises, as well as samples with missing values for variables such as firm performance and firm IT investment. We ultimately acquired a total of 35,449 firm-year observations. We manually collect information from the Internet on the three aspects of corporate culture, namely organizational structures, internal constructions, and social relations. We have obtained a total of 4526 observations from different firms. We use the China Stock Market & Accounting Research Database (CSMAR) to gather information on many aspects of business performance, including firm size, time to market, asset-liability ratio, largest shareholder shareholding ratio, top ten shareholders’ ownership ratio, as well as time, industry, and provincial dummy variables. This paper employs the shrink-tail (Winsor) processing method in the regression analysis to mitigate the impact of outliers on the research findings. This method involves shrinking all continuous variables to the 1% and 99% quantiles. Additionally, to address multicollinearity, this paper centers on the independent variables and the moderator variables.

Dependent variable. The dependent variable is firm performance (TQ). Referring to the research of Bharadwaj et al. (1999), this paper uses Tobin’s Q value of market performance measurement index to measure enterprise performance. The use of Tobin’s Q as a measure of corporate performance is methodologically justified. Calculated as the ratio of a firm’s market value to the replacement cost of its assets, Tobin’s Q effectively captures the firm’s future growth potential and investor expectations. This metric is widely accepted in strategic management research, particularly for evaluating the long-term value implications of strategic resources such as IT investments.

Independent variable. The independent variable is firm IT investment (IT). This paper divides enterprise IT investment into two parts: IT hardware investment (Device) and IT Software investment (Software). Device is a variety of physical assets used to store, process, process and transmit information, such as computers, servers and network equipment. Software refers to the investment in various applications and software in computer systems.

The specific calculation formula is shown in Eqn. 1:

(1)$$\text{IT}=\text{Device}+\text{Software}$$

Moderating variable. The moderating variables are corporate culture Strength (Strength), corporate Innovation (Innovation), corporate Integrity (Integrity) and corporate Trust (Trust).

$Strength$. Existing studies typically utilize survey questionnaires to assign scores to corporate culture (Kotter and Heskett, 1992; Sørensen, 2002). However, the causal relationship established between performance and cultural ratings may be questionable due to “self-serving bias”. This bias implies that employees tend to attribute corporate success to themselves, while blaming failures on external factors such as culture (Martinko and Gardner, 1987), thereby leading to a reverse causality issue—where performance levels may inversely affect the rating outcomes. To overcome this methodological limitation, this paper draws on the approach of Wang and Kan (2014) and adopts a perspective centered on organizational behavioral characteristics to construct more objective metrics for measuring culture. We gathered publicly available data from 4526 publicly traded companies. We assessed the quality of corporate culture using three dimensions: organizational system (OS), internal construct (IC), and social interactions (SR). We conducted an analysis to determine if the company effectively communicated its fundamental vision, culture, and strategic objectives through corporate announcements, corporate websites, and other public channels, accurately reflecting the current state and attributes of the company’s culture at the organizational level. We investigated whether the company provided corporate culture training to its employees, assessing the degree of internalization and potential influence on their behavior. We evaluated if the firm has engaged in any significant media promotion to determine if its core culture has become a well-known brand culture in the public domain. If any of the aforementioned levels of corporate culture performance exist, the assigned value for the level is 1; otherwise, the assigned value is 0. We combine the values of the three layers of corporate culture to calculate a comprehensive measure of corporate culture’s strength. This specific calculation formula is Eqn. 2.

(2)$$\text{Strength}=\text{OS+IC+SR}$$

$Innovation$. This study uses the Innovative Input to Revenue from Main Operations, as proposed by Wang (2014), as a metric for assessing the fundamental culture of innovative values in M&A. For our research and development (R&D) analysis, we utilized comprehensive indicators derived from the annual reports of publicly traded companies. These indicators included the current level of development spending, the amount of R&D investment recorded as intangible assets on the balance sheet, and the R&D expenses listed under administrative expenses in the income statement. The precise calculation formula is displayed in Eqn. 3:

(3)$$\begin{array}{c}\hfill \text{Innovation}=\text{Innovation Input / Revenue from Main Operations}\hfill \end{array}$$

$Integrity$. This study, based on the Wang (2014) research, examines the content of firms’ annual reports to determine if they have been involved in any new lawsuits as the defendant (Integrity1). A value of 1 is assigned if they have, and 0 if they have not. Additionally, we investigate whether there are any penalties included in the non-operating expenditures (Integrity2). Again, a value of 1 is assigned if there are penalties, and 0 if there are not. The quality of the disclosure is evaluated and rated as excellent (A = 0), good (B = 1), passing (C = 2), or poor (D = 3) (Integrity3). Finally, we record whether executives have faced public punishment or condemnation (Integrity4), marking 1 if they have and 0 if they have not. The firm’s culture of integrity can be determined by summing together the four variables mentioned above. Smaller values indicate a higher level of excellence. The precise calculation formula is displayed in Eqn. 4:

(4)$$\text{Integrity}=\text{Integrity} 1+\text{Integrity} 2+\text{Integrity} 3$$

$Trust$. This study employs the text analysis method to measure the trust culture within organizations, drawing inspiration from Jiang et al. (2015) research. Initially, we discerned the words associated with the concept of “trust”. During the second phase, we established the extent of the search for pertinent terms. During the third phase, we conducted a thorough manual search of several sources, including the company’s annual report, internal control report, profile, culture section, official homepage, news stories, and speeches given by the CEO or chairman in interviews and annual meetings. We aimed to identify any references to the word “trust”. In the fourth phase, we conclude that the company has a corporate culture of trust if it incorporates any of the aforementioned terms, assigning trust a value of 1; otherwise, we assign it a value of 0.

Control variables. In order to analyze the potential impacts on the performance of firms’ IT investments, the following control variables were selected: firm size (Size), enterprise’s listing time (Age), asset-liability ratio (Lev), largest shareholder ownership (TOP1), top ten shareholder ownership (TOP10), industry dummy variable (Industry), and year dummy variable (Year).

All variables in use are listed in Table 1.

This article aims to examine the influence of corporate IT investment on business performance and the role of corporate culture in moderating this relationship. To accomplish this, the paper formulates the following model: To account for the time delay between IT investment and performance enhancement in firms, this study introduces a lag of one period to the dependent variable in Eqn. 5 to mitigate the potential issue of reverse causality. We consider factors such as firm size, enterprise’s listing time, asset-liability ratio, share proportion of the largest shareholder, and share proportion of the top 10 shareholders, all of which have the potential to impact both the independent and dependent variables. The regression analysis includes industry-specific fixed effects and year-specific fixed effects to account for the influence of these factors. In methodological terms, the fixed-effects model provides a more rigorous framework for addressing common challenges in corporate research. By controlling for industry and year fixed effects, this approach effectively neutralizes confounding influences from sector-specific characteristics and macroeconomic fluctuations, thereby mitigating omitted variable bias. Compared to the random-effects model, the fixed-effects specification relaxes the stringent exogeneity assumptions regarding explanatory variables, making it particularly suitable for analyzing corporate data with inherent self-selection biases and nested structures. This modeling strategy enhances internal validity by accounting for time-invariant firm-specific heterogeneities that might otherwise confound the relationship between IT investments, cultural moderators, and organizational performance outcomes.

(5)$${\text{TQ}}_{ \mathrm{i},\mathrm{t}+1}={\alpha }_0+{\alpha }_1 {\text{IT}}_{ \mathrm{i},\mathrm{t}}+{\alpha }_2 {\text{IT}}_{ \mathrm{i},\mathrm{t}}*{\text{Culture}}_{ \mathrm{i},\mathrm{t}}+{\alpha }_3 {\text{Controls}}_{ \mathrm{i},\mathrm{t}}+{\epsilon }_1$$

In Eqn. 5, TQ_i,t+1 represents the performance of firm $i$ in year $t+1$, IT_i,t represents the IT investment of firm $i$ in year $t$, Culture_i,t represents the cultural intensity of firm $i$ in year $t$, Controls_i,t is the control variable, and ${ϵ}_1$ is the residual term.