Can the “Complex-Simple Case Diversion” Reform in Civil Litigation Procedures Promote Corporate Innovation?

Abstract

This paper treats the “complex-simple case diversion” reform in civil litigation as a quasi-natural experiment. Using panel data from A-share listed companies (2015-2024) and a difference-in-differences (DID) model, we examine the impact of improved judicial procedural efficiency on corporate innovation. The reform significantly increases corporate innovation output. Mechanism analysis shows that, at the city level, the reform strengthens institutional support by improving adjudication quality, the rule-of-law environment, and IP protection; at the firm level, it alleviates innovation constraints by reducing administrative costs, increasing R&D spending, and optimizing supply chain concentration. Heterogeneity analysis reveals positive innovation effects in the eastern region but negative effects in the central region, with no significant impact in the west. At the industry level, the reform boosts innovation in labor-intensive, capital-intensive, and regulated industries-especially labor-intensive firms-while showing no significant effects in technology-intensive or non-regulated industries. From a “rule-of-law optimization to innovation-driven development” perspective, this paper reveals how judicial reforms promote enterprise innovation, offering theoretical and policy insights for evaluating judicial reforms and improving innovation governance.