From pilot to peers: How intelligent manufacturing policy drives corporate intelligent transformation through demonstration effects

Intelligent manufacturing is a key strategic initiative for advancing China's manufacturing capabilities, and its effective implementation across industries and regions remains an important area of policy exploration. Using data on Chinese A-share manufacturing firms from 2009 to 2022, we exploit a quasi-natural experiment based on the Intelligent Manufacturing Demonstration Project (IMDP) to examine the policy's spillover effects. Our results show that IMDP pilot firms significantly drive intelligent transformation among non-pilot firms in the same city and industry. The policy effects propagate through competitive pressure, institutional pressure, and learning spillovers. Moreover, the impact is stronger for non-state-owned firms, firms with more skilled workers, and those with fewer financing constraints. Our findings suggest that well-designed pilot policies can create catalytic effects that extend beyond targeted firms, thereby promoting broader technological upgrading across the manufacturing sector. These results provide valuable insights into how policymakers can amplify the impact of industrial policies through strategic demonstration and diffusion mechanisms.