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This study examines the effectiveness of the hidden champion policy in enhancing a firm’s innovation competence. Using a unique dataset from China, we apply a time-varying difference-in-differences approach, treating the hidden champion list as a quasi-natural experiment to evaluate the policy’s impact. Our results demonstrate that the hidden champion policy significantly improves a firm’s innovation competence. Mechanism tests reveal that the policy’s positive effects are primarily driven by reduced information asymmetry, while subsidies, tax reductions, and talent cultivation have limited impact. This paper advances the understanding of the role of policy within the hidden champion theory.
Lu et al. (Sat,) studied this question.