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Government procurement and corporate vertical specialization

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  • Yan, Muci
  • Ren, Xiaohang
  • Pan, Zhaoyi

Abstract

Vertical specialization (VS) is crucial for enhancing enterprise competitiveness and upgrading industrial structure in the intense global market competition. We examine the impact of government procurement (GP) on the VS of Chinese A-share listed enterprises between 2015 and 2022. We find that GP significantly promotes VS, with a stronger effect observed in private enterprises, highly competitive industries, and high-tech industries. Reducing transaction cost is a key pathway through which GP enhances VS. This paper presents a novel perspective on GP's influence on enterprise behavior, offering empirical evidence in optimizing procurement policies and fostering enterprise VS.

Suggested Citation

  • Yan, Muci & Ren, Xiaohang & Pan, Zhaoyi, 2025. "Government procurement and corporate vertical specialization," Finance Research Letters, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finlet:v:77:y:2025:i:c:s154461232500323x
    DOI: 10.1016/j.frl.2025.107059
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    Keywords

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    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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