The Impact Of Economic Digitalization On Firm Innovation Under The Open Condition: Mechanism And Chinese Evidence

This dissertation divides economic digitalization into two processes running parallel with different dimensions: One is external digitalization,which occurs outside the firm and is based on general-purpose digital technology;the other is internal digitalization,which occurs inside the firm and is based on specificpurpose digital technology.Using Basic Information Dataset of Firms Registered in Chinese State Administration for Industry and Commerce covering nearly 70 million registered firms and Internet Recruitment Dataset of Chinese Firms including over 100 million online recruitment advertisements,this dissertation measures the external and internal digitalization level of China’s economy,respectively.In the part of theoretical research,incorporating firms’ innovation activities into Melitz-Ottaviano(M-O)model as the classical analysis framework for heterogeneous firm production and trade behavior,this dissertataion introduces external digitalization level being exogenous to economic system and internal digitalization level being endogenous to firm decision-making,and investigates the typical patterns and mechanisms of their growth affecting innovation intensity of firm;further sheds light on the role of firm’s export trade participation in the process of economic digitalization transformation releasing innovation effect.In the part of empirical research,taking advantage of Chinese city-level and firm-level relevant data,this dissertation makes sufficient empirical tests on the relationship among key variables and various testable propositions derived from theory,which provides rich and detailed Chinese evidence for the impact of economic digitalization on firm innovation and the unique role of firm export trade in it.This dissertation finds that(1)There are significant systematic errors in the traditional method of identifying digital firm based on their industries,which may lead the wrong evaluation on the external digitalization level of economy,while above errors can be effectively reduced based on whether the business scope text contains keywords of digital business,so as to make the results of digitalization level measurement more credible.Based on the preset list of Digital Economy Core Industry(DECI),using the corresponding industry code to identify digital firm inevitably lead to “false positive”(regarding a firm actually relevant to digital economy but not belonging to one of DECIs as a non-digital firm)and “false negative”(regarding a firm actually irrelevant to digital economy but belonging to one of DECIs as a digital firm).These two kinds of errors may lead to underestimation on the share of Chinese digital firm and misjudgment on the overall development trend of China’s digital economy,which makes corresponding measurement indexes difficult to accurately capture the temporal and spatial dynamics of external digitalization level of China’s economy.Based on the text of firm’s operation scope,using the core keywords of digital business to directionally search digital firms,although not a perfect identification method,has the effect of “discarding the false and retaining the true”,and helps to alleviate and eliminate the problems above to varying degrees.(2)The absolute demand for labors with digital skills can more accurately capture the internal digitalization level of Chinese firms than relative demand.Observing the firm’s demand for labors with digital skills is one of effective methods to evaluate the internal digitalization level on firm-level.However,compared with absolute demand,the conclusion derived from using relative demand that seems more consistent with economic intuition and reflects the structural change of labor skills to measure the internal digitalization level of Chinese firms—with the growth of size,firm’s internal digitalization level gets lower and lower—is incompatible with our empirical observation in the real world.An enlightening explanation is that the development of digital economy or the progress of digital technology,in China,enhances the complementarity rather than substitution between labors with and without digital skills.This means that when the internal digitalization level increases,the(absolute)demand for the former will naturally rise,but the(absolute)demand for the latter will also expands,which is faster and larger.(3)By promoting the reallocation of innovation resources among heterogeneous firms,the economy’s external digitalization makes firms’ innovation activities more active and dispersed on the whole,while the direction and intensity of this effect on individual firms are related to their production efficiency and export attributes.The economy’s externally digital transformation,or the growth of economy’s external digitalization level,increases the average(mean)and dispersion(variance)of incumbent firms’ innovation intensity in the economy.Although all active firms’ innovation activities in the market benefit from higher external digitalization level in the short term,under well-functioning market mechanism and long-term sufficient adjustment,innovation resources are ultimately reallocated among heterogeneous firms and biased for high-productivity ones.This leads to an increase in innovation intensity only for efficient firms,while a decrease for inefficient ones.Besides,firm’s participation in export trade is conducive to proinnovative effect of external digitalization: Given the increment of external digitalization level and other variables,as for export firms,the direct increase of innovation intensity and indirect increase induced by unit growth of productivity,are more than those of domestic firms.(4)With the expansion of accessible market size,the economy’s internal digitalization releases “Digital Revolution Effect” and “Digital Enablement Effect” respectively through two time-successive phases,to promote the growth of firms’ innovation intensity to varying degrees according to their production efficeitncy and export attributes.The economy’s internally digital transformation,or the growth of economy’s internal digitalization level,boosts firms’ innovation intensity through the expansion of accessible market size.The innovation effect of internal digitalization includes two time-successive phases:In the first stage,the productivity of firms that meets the conditions of internally digital transformation is fixed,and the internal digitalization level surge brought by the change from traditional firms to digital firms finally leads to the upward leap of innovation intensity.This is called “Digital Revolution Effect”(DRE);in the second stage,the productivity of digital firms gradually increases,which promotes the further increase in internal digitalization level and constantly strengthens the ability to transform improvement of their own production efficiency into the growth of innovation intensity.This is called “Digital Enablement Effect”(DEE).Like external digitalization,the export trade participation of firms also helps to release the proinnovative effect from internal digitalization more sufficiently: Given other conditions,compared with domestic firms,the DRE and DEE are both stronger in export firms.