The incentive effect of government subsidies on the digital transformation of manufacturing enterprises

Abstract

PurposeChina's digital economy is flourishing and playing a pivotal role in the national economy. Government subsidies, as an important tool for the national treasury, are a “reassurance” for the digital transformation of manufacturing enterprises. The purpose of this paper is to investigate the relations between the digital transformation of manufacturing enterprises and government subsidies to provide inspiration for promoting the digitization and upgrading of China's manufacturing industry and facilitate enterprises' innovative development.Design/methodology/approachBased on the panel data of 2,928 manufacturing listed companies in China from 2016 to 2020, this paper empirically tests the effect of subsidies on the digital transformation of manufacturing enterprises using fixed-effect econometric regression.FindingsThe results illustrate that subsidies effectively incentivize digital transformation in manufacturing enterprises, and verify different situations through heterogeneity. Further analysis of the moderating effect shows that the innovation level and servitization level of manufacturing enterprises positively moderated the relationship between government subsidies and the enterprise's digital transformation.Originality/valueBased on Chinese manufacturing enterprise samples, this paper empirically tests the incentive effect of government subsidies on the digital transformation of manufacturing enterprises, therefore clarifying the main regulatory effects. This paper could provide enlightenment for manufacturing enterprises to make good use of government subsidies to improve their digital ability, thereby enhancing competitiveness in the digital economy era.

The “heterogeneous” effect of government grants on bank lending

“…Government grants have been extensively studied, but few notice the difference in different government grants. Little is known about whether such grants may have heterogenous effects [ 9 – 11 ]. Our research aims to fill this gap in the literature.…”

Strategies selection for building e-commerce platforms for agricultural wholesale markets: A tripartite evolutionary game perspective

“…Meanwhile, the evolutionary results of the game system also demonstrate that the widespread application of digital technologies (artificial intelligence, blockchain, cloud computing, and digital platforms) has provided corresponding technological conditions for the construction of agricultural e-commerce platforms in wholesale markets. However, there are still problems with insufficient funding [ 51 ], inadequate policies [ 52 ], and difficulty in changing purchasing and sales habits among wholesalers [ 53 ] during the construction process of these platforms. Therefore, the use of evolutionary game models and simulations is effective.…”

The Bidirectional Relationship between Digital Transformation and Corporate Social Responsibility: A Legitimacy Perspective

“…Particularly in developing countries like China, where the government still controls the allocation of resources [11,12], active CSR can improve access to resources such as government subsidies and lower bank credit rates. Empirical research has confirmed the beneficial influence of these resources on the companies' digital transformation [16,56]. For instance, an empirical study conducted by Zhao et al [16] discovered that government subsidies reduce the expenses and risk associated with digital transformation for enterprises, resulting in a significant improvement in their digitalization levels.…”

“…Additionally, greater organizational legitimacy facilitates firms' access to benefits such as government subsidies and lower bank credit rates [12,13], and can effectively alleviate their financing constraints [14]. Access to such resources can help to reduce the costs and risks of digital transformation and enhance companies' level of digitalization [15,16]. Therefore, does CSR, in turn, promote digital transformation in companies?…”