Although the prevalence of digital innovation has attracted increasing attention from policymakers, academics, and practitioners, it remains under-theorized. Using the attention-based view, we examine why and how government digital-initiative intensity drives a firm’s digital innovation. Using a mixed-methods approach and the unique context of China’s aspirant economy, we find that managerial digital attention mediates the link between government digital-initiative intensity and firm digital innovation. Firm political guanxi and digital leadership have moderating effects on the relationship between government digital-initiative intensity and managerial digital attention, and the relationship between managerial digital attention and firm digital innovation. These findings have important theoretical and practical implications. •Government digital initiatives draw firm’s attention and then influence firm digital innovation.•Digital leadership is a key approach for firms to allocate digital attention and direct digital attention into concrete action.•Firm political guanxi with governments acts as a channel for firms to notice, and interpret government digital initiative.