Does the digital divide affect business innovation? -- Moderating effects based on the digital economy

Abstract

In the context of the rapid development of the digital economy and the reshaping of China's new advantages in international cooperation and competition and the promotion of the new development pattern of "double cycle", this paper examines the impact of the digital divide on corporate innovation and its underlying mechanisms based on annual data of A-share listed companies from 2011 to 2021. The study shows that the digital divide inhibits the innovation level of enterprises, and the digital economy reinforces the negative relationship between the digital divide and enterprise innovation. The digital divide inhibits firm innovation by suppressing the role of digital inclusive finance in promoting firm innovation; the widening of the digital divide also leads to the suppression of information asymmetry, which inhibits firm innovation; finally, the study finds that the digital divide has a greater inhibitory effect on firm innovation in non-eastern and non-minority regions. In contrast, the inhibiting effect of digital divide does not play out in ethnic minority gathering areas. The government should do a good job of macro regulation of digital development; firstly, improve the level of digital development in non-eastern regions as well as ethnic minority agglomerations; and require enterprises to consolidate the digital foundation according to the actual situation, introduce digital technology, and promote their own innovation development.