How Does Digital Consumption Affect Corporate Innovation Activity? Evidence from China’s Information Consumption Pilot Policy

Aobo Pi, Siyuan Deng (), Weifeng Zhao and Jiahui Wang
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Aobo Pi: School of Economics, Wuhan Polytechnic University, Wuhan 430048, China
Siyuan Deng: School of Economics, Wuhan Polytechnic University, Wuhan 430048, China
Weifeng Zhao: School of Economics, Wuhan Polytechnic University, Wuhan 430048, China
Jiahui Wang: School of Economics, Wuhan Polytechnic University, Wuhan 430048, China

Sustainability, 2025, vol. 17, issue 21, 1-29

Abstract: Amid rapid technological change and industrial transformation, digital consumption (DC) has become both a driver of domestic demand and a potential catalyst for corporate innovation. Yet, systematic evidence on how DC shapes innovation behavior remains limited. This study investigates the causal effect of DC on corporate innovation activity (CIA) by exploiting China’s Information Consumption Pilot Policy (ICPP) as a quasi-natural experiment with firm-level panel data from 2008 to 2022. The results show that DC significantly enhances CIA through three mechanisms: strengthening government attention to science and technology talent, advancing the circulation and utilization of regional data, and promoting corporate data assetization. Moreover, the effect is stronger in eastern regions, in areas with greater governmental digital engagement, and among firms with stronger managerial incentives. Further analysis indicates that DC not only increases overall innovation activity but also disproportionately fosters substantive innovation, as reflected in invention patents. These findings provide new empirical evidence on the differentiated role of DC in shaping both the quantity and quality of corporate innovation, offering insights for the design of digital economy policies in developing countries.

Keywords: digital consumption; corporate innovation activity; DID method; information consumption pilot policy; substantive innovation; strategic innovation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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