Abstract: Under the dual background of Chinese adherence to the policy of expanding the opening to the outside world and vigorously developing the digital economy, it is of great significance to explore the spillover effect of foreign direct investment on enterprises’ digital technology. Based on the data at regional level and at enterprise level from 2010 to 2021, this paper empirically tests the impact of foreign direct investment on the digital transformation of Chinese enterprises from the perspective of corporate dynamic capability. The findings indicate that foreign direct investment (FDI) plays a crucial role in driving the digital transformation of enterprises and facilitating technology spillover effects. This technology spillover effect is stronger when enterprises have higher dynamic capabilities. Specifically, the higher opportunity recognition ability, integration and restructuring ability, and organizational flexibility ability of enterprises can strengthen the driving role of foreign direct investment in the digital transformation of enterprises. For enterprises in the eastern region, non-state-owned enterprises with stronger willingness for digital transformation, and enterprises with higher internal governance levels, foreign direct investment has a stronger technology spillover effect on the digital transformation of enterprises. According to the research findings, the government needs to further optimize the business environment, strengthen infrastructure construction, enhance regional technology absorption capacity, in order to better introduce and utilize foreign direct investment, and fully leverage its role in promoting the development of China’s digital economy; while enterprises need to improve their dynamic capabilities and corporate governance level, so as to make rational use of and allocate market resources, realize their own transformation and upgrading, and achieve long-term development.

Key words: foreign direct investment, digital transformation, technology spillover effect, dynamic capability