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Does urban innovation policy accelerate the digital transformation of enterprises? Evidence based on the innovative City pilot policy

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  • Liu, Biao
  • Li, Yanfeng
  • Liu, Jipeng
  • Hou, Yufei

Abstract

With the evolution of the digital economy, the gradual digital transformation of enterprises has garnered considerable attention in the market, profoundly influencing sustainable business operations. Local governments are actively fostering this transformation through urban innovation policies. This study analyzes Chinese A-share listed companies from 2003 to 2021 as the research sample. The implementation of the national innovative city pilot policy is regarded as an exogenous shock. A difference-in-differences model was constructed to empirically explore the impact of the national innovative city pilot policy for innovative cities on the digital transformation of local enterprises. The findings indicate a significant enhancement in the level of enterprise digital transformation due to the innovative city pilot policy, supported by robustness tests. Mechanism analysis identifies four pathways through which the policy drives digital transformation: advancing technological progress, improving internal controls, mitigating financing constraints, and reinforcing government support. Subsequent investigations reveal noteworthy heterogeneity in the policy's impact on enterprise digital transformation based on attributes, scale, growth cycles, and regions. The study's conclusions offer valuable insights for maximizing the effectiveness of innovative city pilot policies and fostering enterprise digital transformation.

Suggested Citation

  • Liu, Biao & Li, Yanfeng & Liu, Jipeng & Hou, Yufei, 2024. "Does urban innovation policy accelerate the digital transformation of enterprises? Evidence based on the innovative City pilot policy," China Economic Review, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:chieco:v:85:y:2024:i:c:s1043951x24000567
    DOI: 10.1016/j.chieco.2024.102167
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    More about this item

    Keywords

    Innovation-driven strategy; Innovative city pilot policy; Enterprise digital transformation; Action mechanism; Heterogeneous effect;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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