Digital dividends across boundaries: inter-regional investment under enterprise digital transformation

Inter-regional investment plays a critical role in enabling capital flows and fostering coordinated regional development. Drawing on the micro-level behaviour of establishing inter-regional subsidiaries, this study examines the impact of enterprise digital transformation on inter-regional investment using data on Chinese A-share listed companies from 2011 to 2023. Results show that enterprise digital transformation significantly facilitates inter-regional investment. The primary mechanisms involve increasing the level of specialized division of labour, enhancing information transparency, and improving operational performance. The facilitative impact is more pronounced among non-state-owned enterprises, industries with high competition, and regions with well-developed factor markets. Further analysis reveals an inverted U-shaped distance pattern in this effect. Digital transformation encourages investment towards peripheral and border cities, although core and non-border destinations benefit more. Moreover, inter-regional expansion under digital transformation contributes to a smaller inter-city economic development gap. Through micro-level empirical evidence, this study highlights the digital dividends of enterprise digital transformation across regional boundaries, offering strategic insights for enterprises navigating digital transformation and optimizing investment decisions, while informing government efforts to promote coordinated and sustainable development.