The impact of digital transformation on the quality and safety level of agricultural exports: evidence from Chinese listed companies

China seeks to shift from growth to quality and efficiency, with agriculture central to high-quality development. However, Chinese agricultural exports frequently encounter SPS-related issues (e.g., excessive residues, microbial contamination), constraining export quality upgrading. Policy initiatives (e.g., 14th Five-Year Plan for High-Quality Development of Foreign Trade) emphasize digital trade and digital transformation as engines for foreign trade development. Enterprise digitalisation—using technologies such as IoT, big data, and AI—can standardize production, optimize supply chains, and improve information sharing and credibility. This paper asks whether agricultural enterprises’ digital transformation improves the quality and safety of exported products, through which mechanisms, and with what heterogeneity across firms, products, and destinations. The study contributes by constructing a multi-dimensional indicator of export quality and safety, embedding digital transformation in a heterogeneous-firm trade framework, and combining firm and customs data to quantify firms’ digital transformation and estimate its effects via a staggered DID approach.

The paper reviews three strands: (1) Quality of agricultural exports: foundational theories (Linder 1961; Melitz 2003) and measurements using unit values, ex-post methods, and nested logit; determinants include positive lists, SPS measures, MRLs, and digital finance that push quality upgrading. (2) Enterprise digitalisation: definition and measurement via investment, application, and business transformation; text-mining of listed firms’ reports to measure digital transformation; economic effects include gains in TFP, innovation efficiency, export growth via lower search/distribution costs, specialization, and non-linear effects of digital investment. (3) Digital transformation and export trade: ICT reduces information frictions and expands trade networks; digital skills reshape production/export drivers; digitization expands exports, product variety, and value-added, facilitating movement up the value chain. Prior work has paid limited attention to how firm digital transformation affects the quality and safety of agricultural exports, especially considering agri-product characteristics. This study fills that gap by focusing on food safety-oriented quality and its mechanisms (technological innovation, product traceability, information sharing, quality assurance).

Theory and hypotheses: The authors extend a heterogeneous-firm (Melitz-type) trade model to include digital transformation effects on trade costs, quality-adjusted production costs, and productivity. They show theoretically that digital transformation lowers search and information costs, increases effective productivity, and raises optimal quality. Hypotheses: H1—digital transformation improves export quality and safety; H2—via technological innovation; H3—via product traceability; H4—via information sharing; H5—via quality assurance. Empirical strategy: A staggered difference-in-differences (DID) with two-way and high-dimensional fixed effects quantifies the impact of firm digital transformation on export agricultural product quality and safety. Baseline specification: qua_saf_{fkt} = α + β(digital_ft × post_ft) + γZ_{fkt} + firm–product FE + destination–product FE + firm–destination FE + product–year FE + ε_{fkt}. The outcome is product-level quality-and-safety index for firm f, product k, destination j, year t. Variables: Outcome (quality and safety, qua_saf): Using content analysis of firms’ annual reports/internal control/self-evaluation/CSR reports, the authors code 18 indicators across four dimensions—quality traceability, information communication, quality control, risk prevention—following Chinese national standards and prior literature. Each disclosed item scores 1; scores are aggregated and then reweighted to product level using export value shares. Key regressor (digital): A text-based digital transformation index for listed exporters constructed via Python web-crawling and keyword frequency analysis. Keywords are curated from policy documents and literature, grouped into five dimensions—digital technology applications, digital information systems, digital intelligent management, digital marketing model, digital efficiency improvement—and the log frequency forms the index. Controls: Importer SPS notifications (HS2 level), importer openness (trade/GDP), importer per-capita GDP, RMB exchange rate (USD cross), product tariffs (HS6, with HS4/HS2 fills), and geographic distance (CEPII). Data: China Customs, CSMAR, RESSET, and firms’ annual financial reports for 2007–2016 (post-2007 accounting standardization; customs data through 2016). Cleaning excludes financial/ST/*ST firms, keeps A-shares, and drops key-missing or non-compliant accounting observations. Importer macro/tariff/exchange data from World Bank; distance from CEPII GeoDist; SPS from WTO. Estimation details and tests: Baseline estimation via Poisson pseudo-maximum likelihood (PPML) with high-dimensional fixed effects to handle zero flows and heteroskedasticity. Parallel-trend checks using event-study windows (−4 to +3) show no pre-trends and significant post-treatment gains. Robustness: (i) Alternative outcome (estimated quality via price–quantity residual method), (ii) bilateral shrinkage/truncation (1%/5% tails), (iii) Heckman two-step (exclusion: prior-period exporting), (iv) alternative treatment timing (lead/lag), (v) placebo (random assignment, 1000 draws). Endogeneity: (a) lagged digital index; (b) IV-2SLS with two instruments—provincial long-distance fiber-optic cable density (infrastructure) and city-level historical posts-per-million in 1984 interacted with national internet users (information receptivity), including city fixed effects. First-stage diagnostics (Kleibergen-Paap) support instrument strength and relevance. Mechanism tests: Mediation regressions proxy mechanisms: technological innovation (log R&D and export technological sophistication), product traceability (counts of electronic certifications/QR codes/images/videos on official channels), information sharing (presence of official website and mini-programs), quality assurance (ISO9001, ISO22000, HACCP, QS/CCC certifications).

- Digital transformation significantly increases the quality and safety index of exported agricultural products. Baseline PPML estimates show positive and significant coefficients on the digital × post term (e.g., around 0.26 in specifications including controls and fixed effects), with dynamic event-study effects turning positive and growing for up to three years post-transformation. - Robustness checks—alternative outcome measures, sample shrinkage/truncation, Heckman selection correction, alternative timing, and placebo—consistently support the main effect. - Endogeneity addressed via lagged digital index and two IV strategies (fiber-optic cable density; 1984 posts-per-million × national internet users) yields positive and significant effects; strong first-stage diagnostics (Kleibergen-Paap LM p=0.000; Wald F > 16.38) indicate valid instruments. - Heterogeneity: Effects are stronger for exports to higher-income/developed markets; larger for firms in the eastern region; larger for non-state-owned enterprises relative to state-owned. By product, gains are larger for bulk and consumer-oriented agricultural goods; effects are more pronounced for medium- and low-quality products than for high-quality ones. - Mechanisms: Mediation analyses indicate significant channels via (i) technological innovation (higher R&D and sophistication), (ii) product traceability (digital traceability systems and e-certification), (iii) information sharing (websites/mini-programs improving transparency and feedback), and (iv) quality assurance (adoption of quality management and product certifications).

The findings confirm the theoretical prediction that firm-level digital transformation reduces information and coordination frictions, enhances effective productivity, and incentivizes higher optimal quality, thereby improving the quality and safety of exported agricultural products. The medium- to long-term dynamic effects suggest that benefits accrue as digital capabilities diffuse through production and supply-chain processes. Stronger effects in developed destination markets align with higher consumer quality demands and greater online adoption, while eastern-region and non-state-owned enterprises leverage superior infrastructure and more flexible governance to realize larger gains. Product-type heterogeneity indicates that digital tools most effectively enhance categories where safety and quality assurance are central to market value (bulk and consumer-oriented goods). Mechanism tests validate that digitalization promotes innovation, end-to-end traceability, transparency with consumers, and formal quality assurance—collectively addressing the food safety and quality challenges that constrain agricultural export upgrading.

This study integrates a heterogeneous-firm trade framework with micro evidence from Chinese listed exporters (2007–2016) to show that enterprise digital transformation significantly improves the quality and safety of agricultural exports. The effect is robust to multiple identification strategies and is stronger for developed-market destinations, eastern-region firms, non-state-owned firms, and for bulk and consumer-oriented agricultural products, with greater improvements among medium- and low-quality products. Mechanism analysis highlights technological innovation, product traceability, information sharing, and quality assurance as key channels. Policy implications: (1) Accelerate integration of digital technologies with foreign trade firms by strengthening digital infrastructure and providing financial support for transformation; (2) Tailor policies to local conditions, consolidating eastern-region gains while supporting central and western regions to narrow the digital divide; (3) Mandate and operationalize digital traceability and quality assurance systems for exported agricultural products to enhance intelligent supervision and international competitiveness.