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

Biao Liu, Yanfeng Li, Jipeng Liu and Yufei Hou

China Economic Review, 2024, vol. 85, issue C

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.

Keywords: Innovation-driven strategy; Innovative city pilot policy; Enterprise digital transformation; Action mechanism; Heterogeneous effect (search for similar items in EconPapers)
JEL-codes: C51 D22 E65 L22 O31 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:85:y:2024:i:c:s1043951x24000567

DOI: 10.1016/j.chieco.2024.102167

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