Digital Infrastructure and Enterprise Digital Transformation: Evidence from China

Abstract

As the real economy and the digital economy continue to integrate, enterprise digital transformation has become necessary for the transformation of conventional sectors and the development of organizations. This paper investigates whether improving digital infrastructure can accelerate enterprise digital transformation using the “Broadband China” strategy as a quasi-natural experiment. Using the data from China, we establish a time-varying DID model to explore the effects and underlying mechanisms of digital infrastructure construction. The result suggests that digital infrastructure construction positively influences enterprise digital transformation. This effect is more noticeable for small-scale enterprises, non-SOEs and those in high-tech and technology-intensive sectors. The result also shows that digital infrastructure propels the active and passive digital transformation of enterprises. The results of this paper extend our understanding of the impact of digital infrastructure on regional and enterprise development and offer empirical support for specific paths of enterprise digital transformation.

Keywords: Digital infrastructure, Digital Transformation, the "Broadband China" strategy