Specialized division of labor can improve the production efficiency for enterprises. Existing research mainly focuses on intermediate products while neglecting services. Drawing on the data of listed manufacturing companies from 2007 to 2019 and the “Broadband China” demonstration city policy, this paper establishes a staggered DID model to identify the impact of broadband quality improvement on the division of labor in manufacturing services.

Through two-stage DID estimation, it is found that when the city where the enterprise is located is selected as the “Broadband China” demonstration city, the number of internal service employees of the enterprise decreases by 416 people (compared to the average of 1423 people in the control group, a decrease of 29%), with a particularly significant decrease in R&D personnel. This indicates that the improvement of broadband quality has promoted the division of labor in services, especially in knowledge-intensive services. Mechanism testing finds that after being selected, cities can be connected to each other through high-quality broadband, achieving remote transmission of services between different demonstration cities, thereby alleviating the insufficient service supply capacity in the local market and improving the scale efficiency advantage of service providers. It shows that for homogeneous services with a smaller local service market size, higher service costs, and easier to leverage scale advantages, the impact of policies is more significant. This study provides empirical evidence for information technology to promote the integration of service factor markets and improve the efficiency of factor resource allocation.

The contributions of this paper are as follows: First, it examines the impact of broadband quality on the division of labor in services, and explains the changing trends of the division of labor in knowledge-intensive services, enriching empirical research on enterprise boundaries. Second, existing literature points out that information technology promotes division of labor by reducing communication costs, while this paper emphasizes the connectivity effect of information technology and promotes the division of labor in services by expanding the market size. Third, it proposes a new perspective to explain the impact of information technology on the needs of enterprise employees. This paper points out that for service-oriented employees, information technology is not a substitute for employees, but rather promotes the transfer of employees between specialized enterprises, that is, the transfer of service employees from within manufacturing enterprises to professional service providers, which is a structural optimization.