Digital Industry Cluster Policy and Corporate ESG Performance: Evidence from China’s Innovative Industrial Cluster Program

Abstract

We examine whether digital industry cluster policy is associated with corporate environmental, social, and governance (ESG) performance. We study digital industry clusters within China’s Innovative Industrial Cluster program, a spatial industrial policy combining cluster designation, fiscal support, digital infrastructure, and innovation platforms. Using Chinese A-share listed firms from 2009 to 2023, we exploit staggered cluster designation across cities and estimate difference-in-differences models with firm and year fixed effects. Cluster designation is associated with higher ESG scores, mainly through the governance dimension and, to a lesser extent, the environmental dimension. Additional analyses show that treated firms receive more government innovation subsidies, face lower financing constraints, and increase R&D intensity, consistent with resource provision channels. The results are robust to industry-by-year and province-by-year fixed effects and to wild cluster bootstrap inference. Effects are stronger for firms with greater market attention and in high-technology industries, and larger in regions with weaker digital infrastructure. The findings provide firm-level evidence on how spatially targeted digital industrial policy may support corporate sustainability practices.