Logistics service standardization and corporate innovation: Evidence from a natural experiment

We examine the impact of China's adoption of the logistics service standardization (LSS) as an exogenous shock on firm innovation. The results show that patents obtained by firms located in LSS cities after the reform increased more significantly compared to firms located in non-LSS cities. The findings are robust to alternative types of patents obtained, the number of patent applications, propensity score matched samples, accounting for selection bias, and placebo tests. Additional analyses suggest that the channels for the positive impact of the LSS on innovation are enhanced product market competition, lowered financial constraints, and reduced operating risk. In cross-sectional analyses, we document that the positive impact of the LSS on innovation is more salient for firms with distant supply chain partners, low inventory turnover, low production efficiency, high product potential, large government subsidies, and more bank loans.