The Impact of VAT Credit Refunds on Enterprises’ Sustainable Development Capability: A Socio-Technical Systems Theory Perspective

We investigate whether China’s Value-Added Tax (VAT) Credit Refund policy influences firms’ sustainable development capability (SDC), which reflects innovation-driven growth and green development. Exploiting the 2018 implementation of the VAT Credit Refund policy as a quasi-natural experiment, we employ a difference-in-differences (DID) approach and find causal evidence that the policy significantly enhances firms’ SDC. This suggests that fiscal instruments like VAT refunds are valued by firms as drivers of long-term sustainable and high-quality development. Our mediating analyses further reveal that the policy promotes firms’ SDC by strengthening artificial intelligence (AI) capabilities and facilitating intelligent transformation. This mechanism “AI Capability Building—Intelligent Transformation” aligns with the socio-technical systems theory (STST), highlighting the interactive evolution of technological and social subsystems in shaping firm capabilities. The heterogeneity analyses indicate that the positive effect of VAT Credit Refund policy on SDC is more pronounced among small-scale and non-high-tech firms, firms with lower perceived economic policy uncertainty, higher operational diversification, lower reputational capital, and those located in regions with a higher level of marketization. We also find that the policy has persistent long-term effects, with improved SDC associated with enhanced ESG performance and green innovation outcomes. Our findings have important implications for understanding the SDC through the lens of STST and offer policy insights for deepening VAT reform and promoting intelligent and green transformation in China’s enterprises.