Talent magnets in China: Can talent attraction policies catalyze digital transformation in enterprises?

This study examines the impact of local talent attraction policies on enterprise digital transformation using a quasi-experimental design and data from A-share listed companies in China (2012-2019). Employing a difference-in-differences approach, we find that these policies significantly enhance digital transformation by improving human capital and expanding external digital resources. The effects are more pronounced in enterprises with large external executive compensation gaps, newly-appointed executive teams, younger leaders, better reputations, weaker financing constraints, and those in technology-intensive operations. Moreover, our analysis reveals that greater policy intensity, including more substantial housing or monetary subsidies, significantly promotes digital transformation. The findings highlight the importance of governmental talent management in fostering digital innovation and provide evidence for policies aimed at attracting skilled talent to boost industrial competitiveness.