Firm-Level Analysis of Digital Economy Advancement

With the development of information technology, Chinas digital economy has played an increasingly important role in the overall economic structure. However, previous understandings of digital economy advancement have been limited to the national or regional level, with little exploration of how digital economy progress reflects firm-level innovation performance. Therefore, this study aims to address the following questions: Does the development of the digital economy promote corporate innovation? In non-state-owned enterprises, is the positive relationship between digital economy development and corporate innovation performance significant? Addressing these questions can contribute to a better understanding of the relationship between information technology integration and corporate innovation performance. To this end, this study utilizes data from the China Urban Statistical Yearbook (20112022), including the total per capita use of telecommunications services in Chinese cities, the proportion of employees engaged in computer services and software, the number of internet users per 100 people, the number of mobile phone users per 100 people, and the China Digital Inclusive Finance Index (jointly compiled by the Peking University Digital Finance Research Center and Ant Group). Using principal component analysis, a digital economy index was constructed for different cities and years. This study systematically examines the impact and mechanisms of digital economy development on corporate innovation, as well as the variations in this impact across different types of listed companies. The findings indicate that the level of digital economy development influences changes in corporate innovation. Specifically, the higher the level of digital economy development, the higher the level of corporate innovation. This research aims to help firms recognize the advantages of digital transformation and the emerging trends in corporate innovation.