Government Attention, Market Competition and Firm Digital Transformation

TLDR

Clarifying the driving factors of enterprise digital transformation helps understand industrial digitization forces, improve policy implementation, and narrow regional and firm digital divides for high‑quality sustainable development. The study aims to depict government attention to the digital economy and explore its influencing factors on enterprise digital transformation. The authors analyze 38,891 provincial and municipal government news items with text analysis to map this attention. Government attention positively drives enterprise digital transformation through fiscal R&D spending, digital economy level, digital financial inclusion, industrial agglomeration, and firm nature, while market competition significantly benefits small firms, showing that digital transformation requires both market forces and government‑led digital industrial policies.

Abstract

Clarifying the driving factors of enterprise digital transformation can help us understand the real driving forces of industrial digitization and digital industrialization, improve the implementation of industrial policies, and narrow the digital divide between different regions and firms to facilitate high-quality and sustainable development. Based on 38,891 news items from provincial and municipal governments in China, this paper uses text analysis to depict the government’s attention to the digital economy and explore the influencing factors driving digital transformation. In the empirical analysis, government attention to the digital economy positively impacts enterprise digital transformation primarily through fiscal expenditures on science and technology, the digital economy level, the digital financial inclusion level, industrial agglomeration, and firm nature. The positive impact of market competition on enterprise digital transformation is significant for small-scale firms. The insight from this finding is that enterprise digital transformation cannot be solved entirely by market forces but also needs to be led by digital industrial policies with government attention.