City digitalization and employee welfare in China : an institutional view

Abstract

Given the inconsistent views of the impact of digital technologies on social inequity, this study investigates whether city digitalization fosters or suppresses employee welfare of local firms. Drawing on the institutional view, we argue that city digitalization poses distinct institutional pressures (i.e., regulatory, normative, and cognitive) on local firms to improve their employee welfare; further, the relation between city digitalization and employee welfare is moderated by regulatory, normative, and cognitive-relevant factors. Based on a sample of Chinese listed firms for the period from 2014 to 2019, our findings show a positive role of city digitalization on local firms’ employee welfare, which gets stronger in regions with higher levels of legal development, Buddhism prevalence, and labor activism and in non-state-owned enterprises. Our study contributes to business ethics and digitalization literatures as well as provides important implications for policymakers on how to foster employee welfare in their regimes.