Can blockchain innovation promote total factor productivity? Evidence from Chinese-listed firms

Although the importance of digital economy development has gradually been attached, blockchain technology has been widely questioned in China because it originated from bitcoin, which has been abandoned in China. Can blockchain innovation promote total factor productivity? Based on the blockchain patent data of Chinese-listed firms from 2012 to 2020, we show that blockchain innovation activities can improve the total factor productivity (TFP) of enterprises and verify its robustness using instrumental variable approach, system GMM and Heckman's two-step selection method. Results of mediation effect model show that enterprises' blockchain innovation activities mainly improve TFP through three channels: alleviating financing constraints, reducing supply chain concentration and inefficient investment. Heterogeneity analysis shows that electronic digital data processing blockchain patents have the highest practical value, while financial blockchain innovation inhibits the improvement of TFP in China. Blockchain innovation can bring positive effects on the TFP of manufacturing enterprises and leasing and business service enterprises. The increase in TFP of leasing and business service enterprises brought by blockchain innovation is nearly 70 times that of the baseline regression. We further provide blockchain innovation development suggestions for Chinese government based on these conclusions.