Under the unique setting of common prosperity embedded in the development of digital economy，it is crucial to synchronizing the growth of both the digital economy and common prosperity by ensuring that enterprises， as the micro-entities of the market economy，collaborate in deepening digital transformation and implementing the policy of common prosperity. Based on the data of A-share manufacturing listed firms from 2010 to 2020，a value creation-appropriation （VCA） framework was introduced to explore the impact and internal mechanisms of digital transformation on within-firm common prosperity. The research findings show that digital transformation effectively enhances the firm’s average salary and narrows the pay gap between executives and employees， thereby simultaneously playing the “enlarging the pie” effect and “better dividing the pie” effect to prompt common prosperity within firms. By analyzing and testing the internal mechanisms based on the VCA framework ，the results show that the effects of digital transformation on within-firm common prosperity are mainly achieved by enhancing firms’ salary payment capacity，optimizing labor structures，and restraining excessive on-the-job consumption of executives； in addition， the results of heterogeneity tests show that both the “enlarging the pie” effect and the “better dividing the pie” effect are mainly reflected in non-state-owned firms， labor-intensive firms and small-sized firms，and are more pronounced in growing and mature enterprises respectively. It clarifies the mechanisms and paths of digital transformation’s effects on income efficiency and fairness based on the VCA framework，and provides important micro-level insights for promoting the coordinated development of the digital economy and common prosperity.