Digital technology, as the technological support of the digital economy, combined with the deep integration of emerging technologies such as the internet and cloud computing, has an undeniable impact on high-quality economic development, corporate division of labor and market value, industrial structure upgrade, and digital transformation. Therefore, accurately understanding the economic consequences of digital technology innovation on enterprises and analyzing its impact on total factor productivity (TFP) not only helps the government design and formulate relevant policies but also provides strong support for enterprises to grasp future development directions. Using the Guotai'an database and the National Intellectual Property Database, this paper takes the number of digital patent applications of A-share listed companies from 2011 to 2022 as the proxy variable of enterprise digital technology innovation to investigate the impact of digital technology innovation on the total factor productivity of enterprises. The empirical study finds that digital technology innovation significantly promots the improvement of total factor productivity of enterprises, and the promotion effect still exists after considering the endogeneity problem, robustness test, and entrepreneurship. In terms of impact mechanism, digital technology innovation promotes total factor productivity by improving labor resources to optimize human capital structure, technology renewal to optimize technology capital structure, and cost reduction to optimize enterprise management efficiency. The results of heterogeneity analysis show that the effect of digital technology innovation on the improvement of total factor productivity of enterprises is more obvious in state-owned enterprises, large enterprises, enterprises in mature stage, and enterprises in regions with better economic development. Furthermore, compared with labor-intensive enterprises, technology- and capital-intensive enterprises benefit more from talent, technology, and capital reserves, making them more advantageous in conducting digital technology innovation. Compared with the previous literature, this paper’s marginal contributions can be summarized in two aspects. First, it helps to provide new ideas for the government to encourage the development of digital technology innovation policies. Previous literature usually considers digital technology innovation as a component of the digital economy or digital transformation, focusing on its overall impact on productivity, while empirical studies considering the impact of digital technology innovation separately are relatively scarce. However, digital technology innovation is the technical support of the digital economy, and compared with other forms of digital investment, digital technology innovation investment should have a more important impact on the improvement of total factor productivity of micro-enterprises. In practice, this paper examines the economic consequences of enterprises’ digital technology innovation from a micro perspective, further reveals that digital technology innovation is an important engine for enterprises to improve productivity, and provides some enlightenment for enterprises to build an innovation-driven development pattern. Second, this paper discusses the impact of digital technology innovation on the total factor productivity of enterprises from the perspectives of capital structure optimization and internal and external management and operation. It not only studies the overall impact of digital technology innovation on total factor productivity, but also combs out the mechanism of capital structure optimization and management efficiency optimization, and conducts empirical research on this basis. The research on the economic effect of digital technology innovation at the micro-enterprise level is further enriched.