Can the reduction of institutional transaction costs help private enterprises move towards "Specialization, Refinement, Differential, and Innovation"?

Can the reduction of institutional transaction costs help private enterprises move towards "Specialization, Refinement, Differential, and Innovation"(SRDI)? This article takes the lead in clearly defining the generation and essence of institutional transaction costs, and scientifically constructs an institutional transaction cost index. Using the matching data of private listed enterprises and institutional transaction costs from 2003 to 2020, the GMM method is used to empirically analyze the impact of institutional transaction costs on the "Specialization, Refinement, Differential, and Innovation" of private enterprises. The research findings are as follows: (1) Institutional transaction costs in China have shown an overall downward trend during the sample inspection period, with a decrease of 23.91%. There are also differences in the levels among different regions, with the lowest in the eastern region and the highest in the western region. (2) The reduction of institutional transaction costs is conducive to the growth of total factor productivity and the improvement of innovation level in private enterprises, which helps them move towards "Specialization, Refinement, Differential, and Innovation". This supportive effect is mainly achieved through the "factor allocation effect" and "market competition effect" of enterprise entry. (3) The promotion effect of reducing institutional transaction costs on the Specialization, Refinement, Differential, and Innovation of private enterprises is more evident in enterprises in the eastern region and those with high financing constraints. The research conclusion of this article has important implications for reducing institutional transaction costs, helping private enterprises move towards "Specialization, Refinement, Differential, and Innovation", and building an innovative country.