How does the development of the digital economy affect innovation output? Exploring mechanisms from the perspective of regional innovation systems

TL;DR: This study examines the impact of the digital economy on innovation output across 330 Chinese cities, finding that its development significantly contributes to innovation output, mediated by strengthened regional innovation systems and facilitated integration into innovation networks.

Abstract: This paper explored the paradigm shift in spatial innovation dynamics driven by the rapid emergence of the digital economy (DIGE) through the lens of the regional innovation system (RIS). By integrating DIGE, RIS, and innovation output into a unified analytical framework, this study examined the impact and mechanisms of DIGE on innovation output across 330 Chinese cities from 2011 to 2020. Results show that DIGE development significantly contributes to innovation output. This contribution is mediated by DIGE's strengthening of the RIS, primarily through its facilitation of integration into innovation networks and enhancement of the innovation environment. Regional heterogeneities are evident in the innovation-promoting influence of DIGE, with less developed cities, cities with underdeveloped infrastructure, and smaller cities benefiting more significantly. While the direct impact of DIGE on large central cities is subtle, their pivotal positions enable them to radiate and disseminate innovation spillovers to connected cities through extensive cooperative networks. This study underscored the potential of leveraging DIGE, especially in disadvantaged regions, to cultivate robust and synergistic RIS and act as catalysts for augmented innovation output.