City Digitalization and Employee Welfare: A Stakeholder Empowerment View

Building on the smart cities and empowerment literatures, this study investigates how city digitalization affects employee welfare expenditure of local firms in China. We develop a stakeholder empowerment view and posit that by empowering local governments, the public, and local workers, city digitalization increases employee welfare expenditure of firms located within the city. Analyzing a panel dataset of Chinese listed firms spanning from 2014 to 2019, our study reveals a positive impact of city digitalization on local firms’ employee welfare expenditure. This positive effect is amplified in regions with stronger legal systems, and for firms that attract greater public attention or have a more educated workforce. These findings provide important implications for policymakers on how to foster employee welfare expenditure in their regimes.