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The road to digital innovation: Vertical spillovers of corporate income tax incentives

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  • Li, Kun
  • Wan, Siyu

Abstract

This study investigates the impact of the spillover effects of corporate income tax incentives on enterprise digital innovation, addressing the gap in the theory of tax incentive supply chain spillovers. Using data from supply chain network dataset constructed from the National Tax Survey Database and the Listed Companies Database of China covering the period from 2008 to 2016, we examine the spillover effects of corporate income tax incentives on enterprise digital innovation. Our analysis reveals corporate income tax incentives can effectively stimulate digital innovation in upstream firms, highlighting market demand spillovers effect, financing spillovers effect, and digital knowledge and technology spillovers effect as the driver of the results. These findings offer new insights into the theoretical interplay between tax policies and supply chains and provide important practical implications for optimizing tax incentive policy design, promoting collaborative digital innovation across industrial chains, and fostering new drivers for digital economic development.

Suggested Citation

  • Li, Kun & Wan, Siyu, 2026. "The road to digital innovation: Vertical spillovers of corporate income tax incentives," Economic Modelling, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:ecmode:v:159:y:2026:i:c:s0264999326000908
    DOI: 10.1016/j.econmod.2026.107561
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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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