Can regional innovation policies promote corporate digital transformation? Empirical evidence from China’s national innovation demonstration zones

ABSTRACT

Using a sample of A-share listed companies in Shanghai and Shenzhen from 2007 to 2022, this study constructs a multi-period difference-in-differences model with the establishment of national innovation demonstration zones (NIDZs) as a quasi-natural experiment to investigate the effect of a regional innovation policy on corporate digital transformation. The study finds that the government’s NIDZ policy has significantly promoted the digital transformation of enterprises. The policy effect is mainly reflected in promoting the application of the underlying digitalization technology. An analysis of the influence mechanism shows that NIDZs promote corporate digital transformation through innovation-driven government support and financing optimization effects. To promote corporate digital transformation and enhance enterprise value, NIDZs require relatively perfect digital infrastructure, a high level of intellectual property protection, non-state-owned enterprises, low management myopia, and manufacturing enterprises. The government can set up NIDZs and actively use regional innovation policies to promote the digital transformation of enterprises, explicitly solving the challenging issues that enterprises face in the transformation process.

KEYWORDS:

• National innovation demonstration zones (NIDZs)
• digital transformation
• innovation
• government support
• financing optimization

JEL CLASSIFICATION:

• O38
• O31
• O34
• L52

Disclosure statement

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