Abstract: A sound social credit system is the institutional foundation for enterprises to achieve higher-level division of labor and cooperation, and accelerate the construction of a unified national market. Based on the policy of creating demonstration cities for the construction of China’s social credit system, this paper examines the impact of social credit system construction on the level of professional division of labor in enterprises. The findings show that the construction of a social credit system can improve the level of professional division of labor in enterprises. The mechanism testing reveals that the construction of a social credit system can reduce the searching cost and contracting costs of enterprises, as well as the losses caused by the default of trading partners. Therefore, the construction of a social credit system can improve the professional division of labor of enterprises. The heterogeneity analysis reveals that in the enterprises with lower social trust and higher asset specificity, the construction of social credit system has a more significant effect on improving the level of professional division of labor in enterprises. When the degree of information asymmetry between upstream and downstream enterprises in the industrial chain is high, the construction of social credit system has a more significant effect on improving the level of professional division of labor of enterprises. The economic consequences analysis indicates that the construction of the social credit system can improve the level of specialization and division of labor in enterprises, thus improving the innovation capability and production efficiency of the enterprises. Therefore, the Chinese government should further improve the social credit system and establish a credit information sharing network covering all the credit subjects.

Key words: social credit system, division of labor based on specialization, search costs, contracting costs, loss from default