Does flattening the government hierarchy improve corporate innovation? Evidence from China
研究中国省直管县改革对企业创新的影响，发现该改革通过政治关联、国有性质和政府服务改善促进创新，对非国有企业或新领导省份效果更显著。
We examine the impact of flattening the government hierarchy on corporate innovation. Leveraging the change from province–city–county to province–managing–county (PMC) administrative structures in China, we use a different-in-differences research design to show that the PMC reform enhances corporate innovation. The results are robust to a battery of checks. We report that political connection, state-ownership of firms and improved government services mediate the effects of the PMC reform on corporate innovation. Moreover, in the cross-sectional analysis, we find that the impact of the PMC reform is more salient for non-state-owned firms or when a province has new leadership.