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Government innovation subsidies and enterprise digital transformation: Evidence from Chinese listed companies

Author

Listed:
  • Han, Zhen
  • Luo, Erga
  • Xiong, Xuezhen
  • Li, Jinkai

Abstract

Government innovation subsidies have become a key policy instrument for fostering enterprise innovation and accelerating digital transformation. However, their effectiveness in promoting digital transformation remains insufficiently understood, particularly in emerging economies. Using panel data from Chinese A-share listed enterprises from 2010 to 2021, this study examines how government innovation subsidies influence digital transformation. The results show that such subsidies significantly enhance enterprise digital transformation. Mechanism analysis reveals that subsidies operate through both resource and signaling effects—strengthening R&D investment, expanding technical staff, and accumulating digital assets, while increasing managerial digital attention and market recognition. Furthermore, heterogeneity analysis indicates that the effect is more pronounced for state-owned and small enterprises, as well as those in earlier life-cycle stages. These findings provide evidence that targeted innovation subsidies can serve as effective policy tools for promoting digital transformation, offering practical insights for designing adaptive and differentiated innovation policies in both emerging and advanced economies.

Suggested Citation

  • Han, Zhen & Luo, Erga & Xiong, Xuezhen & Li, Jinkai, 2026. "Government innovation subsidies and enterprise digital transformation: Evidence from Chinese listed companies," Technology in Society, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:teinso:v:84:y:2026:i:c:s0160791x25003367
    DOI: 10.1016/j.techsoc.2025.103146
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    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • 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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