Digital Government and Corporate Subsidy Allocation: How Administrative Digitalization Reshapes Government-Business Resource Distribution in China

This study investigates the impact of government digitalization on local government subsidy allocation in China, with particular attention to its interaction with firm-level digital transformation and its temporal dynamics across different stages of development. Using a panel dataset of 21,742 firm-year observations from Chinese A-share listed companies between 2011 and 2023, we construct a composite index of government digitalization based on principal component analysis and measure firm digitalization through text-mining of annual reports. The empirical design incorporates interaction models, temporal analysis based on structural break identification, and firm-level heterogeneity tests. The findings demonstrate that government digitalization operates primarily through complementary mechanisms with firm digital transformation rather than direct channels. Moreover, we identify threshold dynamics: modest effects during the foundational stage, insignificant effects during the development stage, and pronounced effects during the deepening stage. Heterogeneity analyses further reveal digital equalization effects: traditional institutional advantages—such as state ownership preference and large-firm benefits—become insignificant, whereas high-tech firms respond more strongly than traditional industries. By uncovering these dynamics, this research provides novel empirical evidence on digital government–business interactions, highlighting synergistic effects and institutional equalization outcomes that challenge conventional theoretical expectations while extending resource dependence theory and institutional theory into the digital era.