Can government digitalization promote firm productivity? Evidence from Chinese listed firms

ABSTRACT

In the digital era of governance, few studies have analysed the influence of digital government on micro economies. To fill this gap, we explore the nexus between digital government and firm total factor productivity (TFP), and uncover the potential transmission channels behind this connection by focusing on Chinese listed firms from 2010 to 2017 and utilizing panel regression with firm-, year-, and province-fixed effects. Our findings confirm that digital government has constructive effects on firm TFP. Furthermore, empirical results suggest that this favourable impact can be transmitted through three channels of firm transaction costs and innovation, digital infrastructure construction, and government-market relationships. Further analysis reveals that the beneficial effect of digital government on firms is more significant in provinces with low fiscal transparency and complex topography, indicating that digital government compensates for the disadvantages of low fiscal transparency and inconvenience of steep terrain. Based on these conclusions, we provide suggestions for government digitalization to improve the performance of government-microeconomic complementation.

KEYWORDS:

• Digital government
• firm productivity
• transaction cost and innovation
• infrastructure construction
• government-market relationship

JEL CLASSIFICATION:

• D24
• H10
• H10

Acknowledgments

We are very grateful to the anonymous reviewers for their careful reading of our manuscript and their insightful comments and constructive suggestions. Yongyi Zhu acknowledges the financial support from the “Fundamental Research Funds for the Central Universities” in UIBE (21QD04).

Supplemental data

Supplemental data for this article can be accessed online at https://doi.org/10.1080/00036846.2023.2208853

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Source: Shanghai Securities News, link to the website: https://www.cnstock.com/.

² Link to the website: http://www.echinagov.com/.

Additional information

Funding

This work is supported by the “Fundamental Research Funds for the Central Universities” in UIBE (21QD04)