Digital regulation and firm productivity: Evidence from a quasi-natural experiment in China

Abstract

This study examines the impact of China's pilot Internet courts as an exogenous shock on firm-level total factor productivity (TFP). By employing a staggered difference-in-differences approach, the establishment of Internet courts significantly boosts TFP among pilot firms. The findings show that the positive influence of Internet courts on productivity is primarily through enhancing intellectual property protection, improving the business environment, and accelerating digital transformation. Further analysis reveals that these effects are more pronounced in non-state-owned enterprises, firms in highly competitive markets, and those in industries with high monopoly power, capital intensity, and technological intensity. Overall, the study supports the theoretical benefits of Internet courts and underscores their role in enhancing firm productivity.