Licheng Yang, Sailin Zhu, Chunlin Liu
Digital transformation constitutes a strategic initiative with far-reaching implications for firms. Given the critical role of the board of directors in steering corporate strategies, this study aims to investigate how board functional background diversity influences corporate digital transformation. Using a sample of 4,199 Chinese A-share listed firms from 2008 to 2020, comprising 34,839 firm-year observations, this study reveals a significant inverted U-shaped relationship between board functional background diversity and corporate digital transformation. Moreover, the relationship is more pronounced in non-SOEs, small firms, non-high-tech firms, and firms located in eastern China. This study reconciles conflicting views regarding the strategic consequences of board functional background diversity and extends research on the antecedents of corporate digital transformation.