Industry Concentration and Digital Process Innovation: Evidence from Chinese Rail Transit Firms

Market competition and industrial environment have a significant impact on firms’ innovation behavior. Hence, this study aims to uncover the connection between industry concentration and digital process innovation in Chinese rail transit firms. Grounded in innovation diffusion theory, we explore the effects of industry concentration on digital process innovation and analyze the contingent factors of firm size and environmental support on the above effects. Through empirical analyses of data from Chinese rail transit firms, this study reveals that industry concentration inhibits digital process innovation. Firm size strengthens the negative impacts of industry concentration, while environmental support weakens the main effect. Our findings offer a complementary framework for industry organization activities and practical implications for digital process innovation.