Note(s): This table presents the instrumental variable regression results of capacity utilization on enterprise digital development. Panel A presents the first-stage regressions in which the dependent variable is one of the enterprise digital development proxies, DigitalW and DigitalS. The instrumental variable, phone, is the interaction term of the number of fixed-line telephones per 10,000 people in each prefectural level in 1984 and the annual number of Internet users in the whole country. Panel B reports the second-stage regressions in which the dependent variable is capacity utilization (CU) and the key dependent variable is the fitted value of the enterprise digital development measure. Control variables include Size, Leverage, ROA, CFO, TFP, Employee, Age, BSize, IndR, SH1, SOE and HHI. Regressions in columns 1 and 3 exclude firm-level controls and regressions in columns 2 and 4 include firm-level controls. Variable definitions are presented in  Appendix 2. Continuous variables are winsorized at the 1 and 99% levels. Standard errors are all heteroscedastic, robust and clustered at the firm level. ∗, ∗∗ and ∗∗∗ indicate statistical significance at the 10, 5 and 1% levels, respectively, using a two-tailed t-test

Source(s): Authors’ own work