Does cultural difference impede the allocation of government procurement? Evidence from China

Abstract This study investigates the impact of cultural difference on the location allocation of government procurement in China from 2015 to 2021. We find that cultural distance significantly hinders inter‐regional government procurement, and the degree of impact has an upward trend. Mechanism analysis reveals that cultural distance affects the location allocation of government procurement through information communication and identity recognition between regions. Moreover, cultural distance has a greater impact on large and medium‐sized enterprises, state‐owned enterprises and non‐high‐tech industry enterprises obtaining cross‐regional government procurement orders. Further, inter‐regional trade barriers also hinder the integration of the government procurement market.