Cross-Border Data Flow Restrictions and Manufacturing Resilience: The Role of Digital Transformation

This study investigates the non-linear relationship between cross-border data flow restrictions and resilience among Chinese A-share manufacturing firms from 2014 to 2022. Existing literature focuses on linear effects of data regulations, neglecting non-linear relationships and manufacturing-specific dynamics. Using panel data and a non-linear approach, we explore how varying regulatory intensities affect resilience. Findings reveal a significant inverted U-shape: moderate regulation enhances resilience via improved data security and supply chain efficiency, while excessive regulation weakens it due to higher compliance costs and technological rigidity. Notably, enterprise digital transformation plays a significant moderating role in this relationship—it "flattens" the inverted U-shaped curve between cross-border data flow restrictions and firm resilience. Specifically, as the level of digital transformation increases, the positive promotional effect of low-intensity restrictions on resilience is weakened, and the negative inhibitory effect of high-intensity restrictions on resilience is also alleviated. Heterogeneity analysis shows stronger effects in eastern regions, technology-intensive firms, and those with lower supply chain transparency. This research highlights digital transformation’s complexity in regulated environments, emphasizes differentiated policies, and offers insights for manufacturing sustainability in global value chains.