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Does broadband infrastructure boost firm productivity? Evidence from a quasi-natural experiment in China

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  • Zhang, Liangliang
  • Tao, Yunqing
  • Nie, Cong

Abstract

Broadband infrastructure underpins the development of the digital economy and has a significant impact on firm operations. However, the effect of broadband infrastructure on firm productivity have been rarely studied. By using the enforcement of the "Broadband China" strategy as an exogenous shock, this study investigated the effect of broadband infrastructure on firm productivity. A significant positive effect of broadband infrastructure on firm productivity was identified. It is further shown that information development, reallocation efficiency, innovation promotion and transaction cost reduction were four rational mechanisms through which broadband infrastructure enhances firm productivity. Finally, our findings were more pronounced for non-state-owned enterprises, highly capital-intensive firms and capital-strapped firms. Overall, this study provides insights into broadband infrastructure for enhancing firm productivity in developing countries.

Suggested Citation

  • Zhang, Liangliang & Tao, Yunqing & Nie, Cong, 2022. "Does broadband infrastructure boost firm productivity? Evidence from a quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001647
    DOI: 10.1016/j.frl.2022.102886
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    References listed on IDEAS

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    Cited by:

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    2. Qiong Xu & Xin Li & Fei Guo, 2023. "Digital transformation and environmental performance: Evidence from Chinese resource‐based enterprises," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1816-1840, July.
    3. Feng, Yuan & Chen, Zhi & Nie, Changfei, 2023. "The effect of broadband infrastructure construction on urban green innovation: Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 581-598.
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    5. Bei Liu & Yukun Li & Xiaoya Tian & Lipeng Sun & Pishi Xiu, 2023. "Can Digital Economy Development Contribute to the Low-Carbon Transition? Evidence from the City Level in China," IJERPH, MDPI, vol. 20(3), pages 1-19, February.
    6. Kangjuan Lv & Jiaqi Li & Ye Zhao, 2023. "Can Internet Construction Promote Urban Green Development? A Quasi-Natural Experiment from the “Broadband China”," IJERPH, MDPI, vol. 20(6), pages 1-21, March.
    7. Wen, Huwei & Wen, Changyong & Lee, Chien-Chiang, 2022. "Impact of digitalization and environmental regulation on total factor productivity," Information Economics and Policy, Elsevier, vol. 61(C).
    8. Zhang, Wenzhe & Liu, Guangqiang, 2023. "Digitalization and firm centralization: A quasi-natural experiment based on the “Broadband China” policy," Finance Research Letters, Elsevier, vol. 52(C).
    9. Mengtao Chen & Haojie Zhu & Yongming Sun & Ruoxi Jin, 2023. "The impact of housing macroprudential policy on firm innovation: empirical evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    10. Lingyue Qiu, 2023. "Does Internet Infrastructure Construction Improve Corporate Green Innovation? Evidence from China," Sustainability, MDPI, vol. 15(1), pages 1-26, January.

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    More about this item

    Keywords

    Broadband infrastructure; Firm productivity; “Broadband China” strategy;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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