Based on the digital innovation diffusion theory, this paper takes 446 Chinese manufacturing enterprises as the sample, and explores the internal mechanism of digital innovation in manufacturing enterprises and its impact on corporate performance of different types.

The conclusions of this paper are as follows: First, digital innovation of manufacturing enterprises should focus on three key links: process digitalization, product intellectualization, and service digitalization. Process digitalization can promote product intellectualization, and product intellectualization has a promotion effect on service digitalization. Second, process digitalization and product intellectualization can significantly improve innovation performance, and process digitalization, product intellectualization, and service digitalization can significantly promote financial performance. Third, the persistence of digital investment can not only strengthen the promotion effect of product intellectualization and service digitalization on innovation performance, but also enhance the promotion effect of process digitalization, product intellectualization, and service digitalization on financial performance.

The implications of this paper are that: First, manufacturing enterprises should attach great importance to the introduction of digital technologies and focus their key resources on process innovation, product innovation, and service innovation. Second, manufacturing enterprises should maintain stable and sustained digital investment to avoid the “digital paradox”, and maintain the intensity and rhythm of digital investment to ensure the expected results of digital innovation.

The theoretical contributions of this paper are that: First, unlike existing literature that rarely focuses on digital innovation from a process perspective, it proposes the process mechanism of “process digitalization, product intellectualization, and service digitalization” of digital innovation in manufacturing enterprises, responding to scholars’ call for an in-depth exploration of digital innovation process mechanism. Second, it further refines the relationship between digital innovation and corporate performance from specific dimensions such as process, product, and service, clarifying the value creation mechanism of digital innovation. Third, it innovatively proposes a digital innovation diffusion mechanism of “adoption, routinization, assimilation, convergence, and iteration”, deepening and expanding the digital innovation diffusion theory.