IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v80y2025ics1544612325006154.html

Market competition and corporate digital transformation: The promoting role and mechanism of government subsidies

Author

Listed:
  • Wang, Min
  • Feng, Liang

Abstract

Based on data collected from Chinese listed companies spanning from 2008 to 2022, this study conducts an empirical investigation and draws several key findings. Firstly, it is evident that market competition serves as a catalyst for accelerating enterprise digitization. Secondly, government subsidies act as a moderating factor influencing the interplay between market competition and corporate digital transformation. Thirdly, the effect of market competition on digital transformation demonstrates distinct variations between state-owned and privately-owned enterprises. Lastly, the impact of market competition on digital transformation also exhibits significant differences between high-tech and non-high-tech enterprises.

Suggested Citation

  • Wang, Min & Feng, Liang, 2025. "Market competition and corporate digital transformation: The promoting role and mechanism of government subsidies," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006154
    DOI: 10.1016/j.frl.2025.107354
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325006154
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.107354?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Dongyang & Meng, Li & Zhang, Jintao, 2023. "Environmental subsidy disruption, skill premiums and ESG performance," International Review of Financial Analysis, Elsevier, vol. 90(C).
    2. Fang, Xubing & Liu, Maotao, 2024. "How does the digital transformation drive digital technology innovation of enterprises? Evidence from enterprise's digital patents," Technological Forecasting and Social Change, Elsevier, vol. 204(C).
    3. Tuyen, Bui Quang & Phuong Anh, Do Vu & Mai, Nguyen Phuong & Long, To Quang, 2023. "Does corporate engagement in social responsibility affect firm innovation? The mediating role of digital transformation," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 292-303.
    4. Babar, Md. & Habib, Ahsan, 2021. "Product market competition in accounting, finance, and corporate governance: A review of the literature," International Review of Financial Analysis, Elsevier, vol. 73(C).
    5. Aiping Wang & Rui Han, 2024. "Can digital transformation prohibit corporate fraud? Empirical evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 31(16), pages 1505-1512, September.
    6. Tang, Le & Sun, Shiyu, 2022. "Fiscal incentives, financial support for agriculture, and urban-rural inequality," International Review of Financial Analysis, Elsevier, vol. 80(C).
    7. Zhao, Lin & Chong, Kim Mee & Gooi, Leong-Mow & Yan, Luqing, 2024. "Research on the impact of government fiscal subsidies and tax incentive mechanism on the output of green patents in enterprises," Finance Research Letters, Elsevier, vol. 61(C).
    8. Zhang, Chenrui & Wang, Yatong, 2024. "Is enterprise digital transformation beneficial to shareholders? Insights from the cost of equity capital," International Review of Financial Analysis, Elsevier, vol. 92(C).
    9. Xu, Chao & Sun, Guanglin & Kong, Tao, 2024. "The impact of digital transformation on enterprise green innovation," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 1-12.
    10. Li, Zhigang & Xie, Bingyuan & Chen, Ximing & Fu, Qilong, 2024. "Corporate digital transformation, governance shifts and executive pay-performance sensitivity," International Review of Financial Analysis, Elsevier, vol. 92(C).
    11. Long Xue & Qianyu Zhang & Xuemang Zhang & Chengyu Li, 2022. "Can Digital Transformation Promote Green Technology Innovation?," Sustainability, MDPI, vol. 14(12), pages 1-20, June.
    12. Hua Feng & Fengyan Wang & Guomin Song & Lanlan Liu, 2022. "Digital Transformation on Enterprise Green Innovation: Effect and Transmission Mechanism," IJERPH, MDPI, vol. 19(17), pages 1-31, August.
    13. Jianhua Zhu & Julien S. Baker & Zhiting Song & Xiao-Guang Yue & Wenqi Li, 2023. "Government regulatory policies for digital transformation in small and medium-sized manufacturing enterprises: an evolutionary game analysis," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 10(1), pages 1-18, December.
    14. Xiang, Xiaojian & Liu, Chuanjiang & Yang, Mian, 2022. "Who is financing corporate green innovation?," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 321-337.
    15. Shen, Chuang & Wu, Junyi & Li, Ying & Chen, Qian, 2025. "Does digital transformation improve the cost efficiency of commercial banks? Evidence from China," Finance Research Letters, Elsevier, vol. 73(C).
    16. Tian, Guangning & Li, Bo & Cheng, Yue, 2022. "Does digital transformation matter for corporate risk-taking?," Finance Research Letters, Elsevier, vol. 49(C).
    17. Wang, Lanfang & Wang, Yue & Zhou, Jing, 2022. "Political connection,government R&D subsidies and innovation efficiency: Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
    18. Cheng, Yiran & Zhou, Xiaorui & Li, Yongjian, 2023. "The effect of digital transformation on real economy enterprises’ total factor productivity," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 488-501.
    19. Zareie, Mobina & Attig, Najah & El Ghoul, Sadok & Fooladi, Iraj, 2024. "Firm digital transformation and corporate performance: The moderating effect of organizational capital," Finance Research Letters, Elsevier, vol. 61(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yan, Jin & Li, Zuowen & Li, Yanru, 2025. "Dialect diversity and enterprise digital transformation," Finance Research Letters, Elsevier, vol. 82(C).
    2. Zhao, Guobin & Shao, Wei & Maseeh, Haroon Iqbal & Lei, Xue & Lin, Ouwen & Yuan, Yanzhe, 2025. "Can brand co-branding trigger stock price volatility? The insider effect of executive trading behavior," International Review of Financial Analysis, Elsevier, vol. 106(C).
    3. Liu, Xian & Han, Yirui, 2025. "The Impact of state-owned capital intervention on the innovation capability of private high-tech enterprises," Finance Research Letters, Elsevier, vol. 86(PA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Yuanyuan & Zhang, Yindan & Chen, Chen, 2025. "Enterprise digital transformation, government subsidies, and green innovation performance," Finance Research Letters, Elsevier, vol. 81(C).
    2. Ding, Tianli & Yang, Lin, 2025. "Intellectual property protection and corporate digital transformation: An empirical analysis from the perspectives of intellectual property protection and digital governance," International Review of Economics & Finance, Elsevier, vol. 100(C).
    3. Zheng, Dawei & Wang, Tingdong, 2025. "Supply chain resilience, logistics efficiency, and enterprise competitiveness," Finance Research Letters, Elsevier, vol. 79(C).
    4. Ye, Xincai & Miao, Lin, 2025. "Digital transformation and green finance efficiency of tourism enterprises: The effect of credit ratings," International Review of Financial Analysis, Elsevier, vol. 106(C).
    5. Zhen, Xiaofei & Zhou, Yiyang, 2025. "Digital transformation and corporate creditworthiness," Finance Research Letters, Elsevier, vol. 74(C).
    6. Teng, Yuqiang & Du, Anna Min & Lin, Boqiang, 2024. "The mechanism of supply chain efficiency in enterprise digital transformation and total factor productivity," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    7. Lu, Zhiqiang & Li, Hongyu, 2023. "Does environmental information disclosure affect green innovation?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 47-59.
    8. Ma, Jinghao & Shang, Yujie & Liang, Zhenghan, 2025. "Digital transformation, artificial intelligence and enterprise innovation performance," Finance Research Letters, Elsevier, vol. 78(C).
    9. Cai, Cheng & Zhou, Lianjie & Liu, Dongshuang, 2025. "Dynamic relationship between tax reputation, digital transformation, and corporate tax compliance in financial markets," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    10. Li, Hemei & Liu, Zhenya & Hachard, Virginie, 2024. "Digital transformation driving green innovation: Evidence from Chinese A-Share firms," International Review of Economics & Finance, Elsevier, vol. 95(C).
    11. Ma, Li-na & Zhang, Jing-jing, 2025. "Digital transformation, board structure, and organizational innovation capacity," Finance Research Letters, Elsevier, vol. 73(C).
    12. Guo, Long & Cai, Can & Yang, Debin & Zhou, Zibu, 2025. "Executive compensation disparity and corporate operational performance," International Review of Economics & Finance, Elsevier, vol. 100(C).
    13. Wang, Baoyi & Khan, Inayat & Ge, Chenlu & Naz, Huma, 2024. "Digital transformation of enterprises promotes green technology innovation – The regulated mediation model," Technological Forecasting and Social Change, Elsevier, vol. 209(C).
    14. He, Bingquan & Gan, Lu, 2025. "Exploring the synergistic effect of CEO power and technological expertise in driving corporate digital transformation," International Review of Financial Analysis, Elsevier, vol. 98(C).
    15. Li, Hao & Wang, He, 2025. "How does a fair competitive policy affect manufacturing enterprises' digital transition? Evidence from the implementation of the fair competition review system," Finance Research Letters, Elsevier, vol. 79(C).
    16. Liang, Wuchao & Wang, Ying & Wu, Ruopeng, 2025. "Can innovation policies enhance the resilience of corporate value chains?," Finance Research Letters, Elsevier, vol. 80(C).
    17. Ziyang Shi & Danxue Fan, 2025. "Dual Mechanisms of Digital Transformation in Sustaining Green Innovation: A Supply Chain Perspective on Capability–Motivation Dynamics," Sustainability, MDPI, vol. 17(20), pages 1-34, October.
    18. Chen, Biao & Lin, Huan & Shan, Biaoan & Xiao, Yundong, 2024. "Government investment in science and technology, digital transformation, and innovation in manufacturing enterprises," Finance Research Letters, Elsevier, vol. 69(PB).
    19. Wang, Yangyang & Zhou, Liangxiao & Li, Tianqun & Feng, Chunyang, 2025. "The impact mechanism of industrial transformation and upgrading on the urban-rural income gap: An analysis based on the threshold effect of digital inclusive finance development," Finance Research Letters, Elsevier, vol. 77(C).
    20. Yang, Yuzhen & Tang, Mingfu, 2025. "Analysis of the impact mechanisms of the digital economy and executive risk preference on the intelligent transformation of enterprises," International Review of Economics & Finance, Elsevier, vol. 102(C).

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006154. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.