Digital highways to resilience: New evidence on how network infrastructure strengthens enterprise performance

Background and Motivation

In today’s rapidly changing business landscape, the ability of enterprises to withstand shocks and adapt to crises has become more critical than ever. As digital transformation accelerates, understanding the underlying drivers of resilience is a top priority for both business leaders and policymakers. This research explores a crucial but often overlooked factor: the role of network infrastructure, such as broadband connectivity, in building enterprise resilience.

Methodology and Scope

Drawing on dynamic capabilities theory, the study employs a multi-period Difference-in-Difference (DID) model, using the nationwide “Broadband China” strategy as a natural experiment. This innovative approach enables the authors to examine how improvements in network infrastructure influence enterprise resilience, looking at both internal operations and external relationships. The analysis spans multiple years and considers firms of varying size, industry competitiveness, and technology intensity.

Key Findings and Contributions

The research uncovers several important insights:

• Network infrastructure significantly enhances enterprise resilience, as confirmed by robust empirical tests.
• Two key mechanisms underpin this effect: network infrastructure facilitates digital transformation within firms and helps diversify their customer base, reducing reliance on any single client.
• The positive impact is especially strong in highly competitive industries, high-tech sectors, firms facing greater bankruptcy risk, and those with lower institutional investor ownership.
• The study further finds a strong positive correlation between enterprise resilience and overall firm performance.

Why It Matters

As companies face growing uncertainty from economic, technological, and geopolitical shocks, investing in digital infrastructure emerges as a powerful strategy to bolster corporate resilience and long-term success. The findings highlight the vital importance of national broadband initiatives and provide actionable guidance for firms and policymakers aiming to future-proof their organisations.

Practical Applications

Business leaders can leverage these findings by prioritising investment in digital infrastructure and accelerating digital transformation to strengthen crisis response capabilities. Policymakers, meanwhile, are encouraged to expand broadband access and promote innovative infrastructure projects, particularly for sectors and firms that stand to benefit most. Ultimately, this research supports a data-driven roadmap for enhancing enterprise resilience and unlocking sustained business growth in the digital age.

Discover high-quality academic insights in finance from this article published in China Finance Review International. Click the DOI below to read the full-text original!