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The effect of digital government on corporate total factor productivity

Author

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  • Shihao Chen
  • Xiaojun Wang
  • Tian Gan
  • Guanqi Gui

Abstract

This study examines the influence of digital government initiatives on corporate total factor productivity (TFP). Employing a difference-in-differences (DID) methodology and analyzing data from publicly listed companies spanning the period 2010 to 2020, we investigate the impact of digital governance on corporate TFP. Our findings reveal a noteworthy positive effect, with an average TFP increase of 5%. Further exploration through heterogeneity analysis indicates that this impact is particularly pronounced in regions with robust network infrastructure, increased marketization, and decreased economic uncertainty, particularly among privately-owned enterprises. Moreover, we identify key mechanisms through which digital governance fosters this enhancement in TFP, including the facilitation of technological innovation, efficient allocation of high-skilled labor, and improved investment efficiency. Our research underscores the significant role of digital government initiatives in bolstering corporate TFP and contributes to a deeper understanding of the mechanisms underlying this relationship.

Suggested Citation

  • Shihao Chen & Xiaojun Wang & Tian Gan & Guanqi Gui, 2024. "The effect of digital government on corporate total factor productivity," PLOS ONE, Public Library of Science, vol. 19(9), pages 1-27, September.
    • Handle: RePEc:plo:pone00:0308093
    DOI: 10.1371/journal.pone.0308093
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