Promoting corporate sustainability: The effect of special economic zone policy on enterprises' digital transformation

Digital transformation (DT) is the core driving force for enterprises aiming to achieve sustainable development in the future. This paper investigates the impact of Special Economic Zone (SEZ) policy on DT. Prior research focused on economic returns, leaving DT effects underexplored. Utilizing data from Chinese listed enterprises spanning 1990 to 2020, this study employs a difference-in-differences (DID) approach to compare enterprises located in different treated regions before and after the implementation of SEZ policies. Our findings indicate a significant increase of 1.342 in DT attributable to these policy effects, driven by SEZ initiatives that reduce operating costs, alleviate financial constraints, and promote innovations. This study sheds new light on the effective external solutions in promoting corporate sustainability in terms of digital transformation, and provides new insights into non-monetary return of government industrial policies.