A Place-Based Innovation Policy and Enterprise Digital Transformation: Evidence from China

The place-based pilot policy for national innovation demonstration zones aims to infuse innovative vitality into the participating cities. Utilizing data from 2240 enterprises over the period 2002 to 2022, we examine the impact of this pilot policy on enterprise digital transformation through the application of a staggered difference-in-differences model. The empirical results show a positive impact on enterprise digital transformation after the implementation of the pilot policy, these findings maintain their robustness after undergoing a series of sensitivity and robustness checks. This positive effect is observed to be transmitted through three mechanisms: digital technology innovation, alleviation of financing constraints, and an increase in R&D investment, respectively. We also observe heterogeneity in the effects based on enterprises’ location, industry, and state ownership status.