The Impact of Urban Digital Economy Development on Manufacturing Innovation Efficiency: Evidence from Chinese Listed Manufacturing Firms

Abstract

As we enter the digital era, the digital economy provides an opportunity for China’s manufacturing industry to achieve ‘smart manufacturing’ and provides important support for China to move from a ‘big manufacturing country’ to a ‘strong manufacturing country’. This paper constructs an indicator system for the level of digital economy development in Chinese cities by determining the connotation of China’s digital economy based on the characteristics of its digital economy development. Based on the application of entropy value method to measure the level of digital economy development of cities, we empirically investigate the impact of the level of digital economy development of cities on the innovation efficiency of manufacturing industry using mixed panel data of listed Chinese A-share manufacturing companies and cities from 2011 to 2019. The empirical study finds that the level of urban digital economy development is conducive to improving the overall innovation efficiency, innovation quality efficiency and innovation quantity efficiency of enterprises, and overall, the digital economy has a significant contribution to the innovation efficiency of manufacturing industry. There is regional, firm size and industry heterogeneity in the impact of urban digital economy development level on manufacturing innovation efficiency, and this heterogeneity is further manifested in the types of manufacturing innovation efficiency. For example, the urban digital economy enhances the innovation efficiency of small-scale firms mainly through the quantity of innovation rather than the quality of innovation.