Does Digitalization Improve Product Quality? Evidence from China

The role of digitalization is becoming increasingly important. By developing Python codes, we have obtained annual report data from Chinese A-share listed companies, enabling us to quantify their product quality. Empirically, we have discovered a significant U-shaped relationship between the extent of digitalization of enterprises and the quality of their products. Furthermore, mechanism analysis reveals that digitalization effectively enhances the specialization level of these listed companies, thereby leading to an improvement in product quality. Moreover, this paper delves into the heterogeneity of the impact of digitalization on product quality. Based on the findings of this paper, we provide some policy implications.