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Illuminating the digital path: the signalling effects of talent subsidies on enterprise digital transformation

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  • Shengming Hu
  • Kai Lin
  • Hongyan Wang
  • Hui Wang

Abstract

Most of the existing literature has focused on the innovation effects of government subsidies, often neglecting the potential impacts of talent subsidies on enterprise digital transformation. Using signalling theory and data from Chinese listed companies, this study examines the influence of talent subsidies on digital transformation. Results indicate that increased talent subsidies significantly incentivize enterprise digital transformation, which is sustainable in the long run. Mechanism tests indicate that the signalling effects of talent subsidies act primarily by attracting skilled talent, alleviating financial constraints, and promoting collaborative innovation, thereby providing the necessary talent, funds, and technology for digital transformation. In addition, heterogeneity analysis shows that the signalling effects of talent subsidies are stronger for enterprises led by executives with a digital background and high educational qualifications and for small, non-state-owned, and growth-stage enterprises. Furthermore, this effect is more pronounced in enterprises within non-technology-intensive industries and regions with well-developed new infrastructure. This study not only extends the research boundaries on the drivers of enterprise digital transformation and the signalling effects of government subsidies but is also a valuable reference for policymakers in designing talent subsidies to promote digital development.

Suggested Citation

  • Shengming Hu & Kai Lin & Hongyan Wang & Hui Wang, 2026. "Illuminating the digital path: the signalling effects of talent subsidies on enterprise digital transformation," Applied Economics, Taylor & Francis Journals, vol. 58(28), pages 5445-5461, June.
    • Handle: RePEc:taf:applec:v:58:y:2026:i:28:p:5445-5461
    DOI: 10.1080/00036846.2025.2506846
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