Government procurement and corporate vertical specialization

Muci Yan, Xiaohang Ren and Zhaoyi Pan

Finance Research Letters, 2025, vol. 77, issue C

Abstract: Vertical specialization (VS) is crucial for enhancing enterprise competitiveness and upgrading industrial structure in the intense global market competition. We examine the impact of government procurement (GP) on the VS of Chinese A-share listed enterprises between 2015 and 2022. We find that GP significantly promotes VS, with a stronger effect observed in private enterprises, highly competitive industries, and high-tech industries. Reducing transaction cost is a key pathway through which GP enhances VS. This paper presents a novel perspective on GP's influence on enterprise behavior, offering empirical evidence in optimizing procurement policies and fostering enterprise VS.

Keywords: Government procurement; Vertical specialization; Transaction costs (search for similar items in EconPapers)
JEL-codes: G38 H32 H57 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:77:y:2025:i:c:s154461232500323x

DOI: 10.1016/j.frl.2025.107059

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