Abstract: With the rapid advancement of digital technologies, emerging technologies such as artificial intelligence, the Internet of Things, blockchain, robotics, 3D printing, cloud computing, and big data are increasingly being applied in the manufacturing industry, driving a trend toward digitalization and intelligence in the global manufacturing sector, represented by Industrial Internet and Industry 4.0. Digital innovation is also an important pathway for Chinese manufacturing firms to achieve transformation and upgrading. However, different from conventional technological innovation that occurs in relevant independent domains, digital technological innovation is a systemic and holistic endeavor. It imposes more stringent requirements on firms’ resources and capabilities, demands more substantial investment, and brings in higher innovation risks. According to the Behavioral Theory of the Firm, firms’ strategic choice is affected by their performance feedback. Based on the organizational ambidexterity view, radical innovation happens in new knowledge domains, distinct from existing technological trajectories, and thus needs higher resource investment, bearing higher risks. In contrast, incremental innovation involves improvement, refinement and extension in current knowledge domains, and hence requires lower resource investment, bearing lower risks. The more a firm pursues radical innovation with a certain amount of resources, the higher effectiveness of innovation it achieves. Due to their varying motivations and capabilities for innovation, firms with different levels of performance have different focuses in their strategic choices of digital innovation, either on the quantity of digital innovation or on the effectiveness of digital innovation. Furthermore, the allocation of resources for digital innovation is impacted by managers’ cognition of decision-making, and ownership concentration affects firms’ decision-making and implementation, the effectiveness of resource employment as well as the judgment of risks. Therefore, the decision-making process of digital innovation is influenced by ownership concentration. Based on the Behavioral Theory of the Firm and the organizational ambidexterity view, this study investigates the impacts of performance feedback on the quantity and effectiveness of digital innovation in manufacturing firms, as well as the moderating role of ownership concentration. Using a sample of manufacturing firms listed on the A-share markets of Shanghai, Shenzhen, and Beijing from 2012 to 2023, we find that firms with high industry status place more emphasis on the quantity of digital innovation, while those with low industry status focus more on the effectiveness of digital innovation. Ownership concentration amplifies the emphasis on digital innovation quantity in firms with high industry status and diminishes the focus on digital innovation effectiveness in firms with low industry status. The conclusions of this study extend the research context of the Behavioral Theory of the Firm, by targeting digital innovation and dividing digital innovation into innovation quantity and innovation effectiveness. Also, we enrich the research on the antecedents of digital innovation, from the perspective of firms’ performance feedback, and explicate the influence of firms’ performance compared with the industry average on the strategic choice of digital innovation quantity or effectiveness. In addition, this study analyzes the moderating effects of ownership structure based on firms’ practice in the emerging context, and provides references for the digital innovation practices of Chinese manufacturing firms from the perspective of ownership structure.