Digitalization of the Business Environment and Innovation Efficiency of Chinese ICT Firms

Abstract

This study investigates how the digital business environment affects firms' innovation input variables. It was discovered that digitization leads to ongoing corporate environment optimization, which improves the effectiveness of innovation. One of the institutional environment factors, digitalization, increases the redundancy of government subsidies on businesses' investments in innovation. It also helps to eliminate duplication in innovation investment through the financial environment and the protection of legal rights. With increasing marketization in the informal institutional framework, the degree of R&D investment redundancy lowers while R&D human resource investment redundancy grows. Digitization not only lowers the grade of innovation, but it also has a negative association with the duplicate nature of commercial R&D investments. The authors' research combines institutional environment theory and digital development to establish a new empirical foundation for corporate development in order to boost innovation efficiency.