The impact of e-commerce and R&D on firm-level production in China: Evidence from manufacturing sector

Abstract

E-commerce provides opportunities to extend the market and plays a vital role in modern economy. However, its implementation often requires high-level technical infrastructure. This study regards both e-commerce and R&D as input factors and analyses their impact on firm output in the manufacturing sector of China. We find that e-commerce capital stocks and R&D capital stocks have a significant positive effect on the output growth, with R&D being more influential than e-commerce. Meanwhile, the inter-industry network externalities of e-commerce capital stocks have a significant positive impact on production growth. Still, the intra-industry network externalities of e-commerce capital stocks are significantly negative, which means online purchase and sales through e-commerce may induce product imitation (i.e., business stealing) and, thus, reduce output for certain companies in the industry. These findings suggest that R&D and favourable external innovation environment are the key factors for enhancing enterprise production levels.