With data deeply embedded in enterprise operations, Internet information risks have become externalized and systemic, severely threatening enterprise stability. In this context, enterprise vertical speciali- zation is facing severe challenges, as data interconnectivity increases information leakage and cybersecurity conflicts, weakening long-term cooperation and causing “de-specialization”. Enterprises struggle to combat cyber crime due to information silos, limited resources, and weak awareness, with some managers perceiving a conflict between pursuing performance and investing in security, resulting in insufficient market-driven information risk mitigation. The unique value of local government Internet information risk governance lies in supplying institutional public goods that enable a virtuous cycle of “controllable risks and deepened speciali- zation”, resolving the security-efficiency dilemma. However, existing research lacks a systematic framework for local government governance evaluation. Therefore, approaching from the perspective of local government Internet information risk governance provides a novel analytical dimension for addressing the weakening of vertical specialization in the digital economy.

This paper constructs an indicator system for local government Internet information risk governance based on relevant laws, cybersecurity strategies, and enforcement actions, encompassing preventive, real-time, and outcome-based dimensions. The empirical results show that improved governance significantly promotes enterprise vertical specialization by reducing information costs in both the formation and maintenance of transactional relationships. Heterogeneity analysis reveals that enhancements in coordination, efficiency, and deterrence strengthen governance effectiveness, especially in competitive industries and sectors with greater external information dependency.

The marginal contributions of this paper are threefold: First, it broadens the understanding of micro-level enterprise decisions by introducing an information risk governance perspective in the digital context. Second, it refines the transaction cost theory by distinguishing information costs in the formation and maintenance of transactional relationships. Third, it develops a governance evaluation system tailored to the digital economy, assessing local government performance across preventive, responsive, and outcome-based dimensions.