Does digital technology innovation work better for industrial upgrading? An empirical analysis of listed Chinese manufacturing firms

Using the panel data of Chinese-listed manufacturing firms from 2008 to 2019, in this paper we apply the patent data and econometric models to identify digital technology innovation and to explore the mechanism for the digital technology innovation on industrial upgrading of the manufacturing firms. We also use the total factor productivity of firms to measure industrial upgrading of manufacturing firms. Our empirical results show that digital technology innovation is conducive to industrial upgrading of manufacturing firms. We find that the total factor productivity of firms with digital technology patents is significantly higher than that of firms without digital technology patents, and more importantly, the total factor productivity increases on higher scales of digital technology patents at an increasing rate. In addition, owning digital technology patents generates boosts to the total factor productivity of manufacturing firms through reducing the operating costs, improving the efficiency of resource allocation and enhancing the innovation capability.