Driving digital innovation: the role of government attention in Chinese firms

This study examines the impact of government digital attention on firms’ digital innovation in the context of China. Using a panel dataset of Chinese listed firms, we find that government digital attention significantly promotes the quantity of digital innovation, but has a limited effect on innovation quality. This suggests that firms may prioritise strategic innovation efforts aimed at securing government support. Mechanism analysis identifies several channels through which government attention facilitates digital innovation, including improvements in digital infrastructure, increased digital subsidies, reduced financing constraints, and greater R&D investment. Further heterogeneity analysis shows that the positive effect of government digital attention is more pronounced among large firms, non-state-owned enterprises, manufacturing firms, and firms located in the eastern region. These findings contribute to a deeper understanding of the allocation of government attention and its implications for corporate innovation, offering empirical insights for policymakers seeking to promote high-quality development of the digital economy.