The power of the helmsman: the influence of leading companies in digital technology innovation

Leading companies, as trailblazers and pioneers in digital technology innovation (DTI), play a crucial role in overcoming technological bottlenecks and driving industrial upgrading. This study identifies over 325,000 digital patent applications and constructs a firm-level DTI index. Thereafter, by distinguishing between leading and follower firms, this study empirically examines leading firms' influence on the follower firms' DTI. The findings reveal that the leading firms' DTI level significantly enhances follower firms' DTI level. Specifically, a standard deviation increase in leading firms' DTI increases follower firms' DTI within the same industry by 7.91%. The main conclusions hold under several robustness tests. Mechanism analysis indicates that leading firms primarily exert their influence through demonstration, spillover, and competition effects, with positive demonstration and spillover effects outweighing the negative competition effects. Finally, leading firms in regions with better digital infrastructure - in nationally key supported industries - and state ownership exert a greater promoting effect on follower firms' DTI.