Breaking spatial boundaries: how digital governance shapes the geographical distribution of corporate supply chains

Against the backdrop of global value chain restructuring, geo-economic uncertainty, and growing concerns over supply chain resilience, firms increasingly need to organize supply chains across regions. This study examines whether government digital governance can reduce institutional spatial frictions and expand the geographical distribution of corporate supply chains. Using panel data on Chinese A-share listed firms from 2010 to 2023, we exploit the 2014 National Pilot Policy of Information Benefiting the People as a quasi-natural experiment and estimate a difference-in-differences model. The results show that the policy increases firms’ weighted distances to customers and suppliers by 34.178% and 24.982%, respectively. Channel tests provide evidence consistent with reduced information asymmetry, lower institutional transaction costs, and lower ex post contracting costs. These findings identify digital governance as an institutional driver of market integration.