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Keywords

virtual agglomeration; regional innovation; digital infrastructure; digital economy

Abstract

In the contemporary milieu of economic advancement, innovation emerges as a cornerstone driver propelling progress forward, shaping the trajectory of societal development. The dynamic evolution of the digital economy has precipitated the advent of virtual agglomeration, a novel spatial paradigm that catalyzes the convergence of digital entities, thereby engendering a fertile ground for fostering innovation and augmenting regional competitiveness. This study embarks on an empirical expedition, employing a rigorous methodology grounded in provincial panel data spanning the substantial period from 2013 to 2022. Focused intently on the 29 provinces spanning China’s expansive territorial expanse, encompassing the eastern, central, and western domains, the research endeavors to unravel the intricate interplay between virtual agglomeration and regional innovation capabilities through the lens of econometric modeling, thereby elucidating the nuanced nexus between these multifaceted constructs. The empirical findings gleaned from this comprehensive analysis underscore a salient observation: the extent of virtual agglomeration within China’s diverse regional landscape exerts a discernibly differential impact on the innovation capacities of the respective provinces. Further probing into the underlying mechanisms reveals that virtual agglomeration serves as a catalyst for bolstering regional innovation prowess primarily by augmenting the quality and accessibility of regional digital infrastructure. Virtual agglomeration, characterized by the clustering of digital firms and talent in online spaces, facilitates the diffusion of knowledge, fosters collaborative endeavors, and unlocks economies of scale, thereby amplifying the innovation potential of regions. This phenomenon is particularly pronounced in regions endowed with robust digital infrastructure and conducive regulatory frameworks, where virtual agglomerations emerge as vibrant hubs catalyzing knowledge exchange and innovation diffusion. Nevertheless, the efficacy of virtual agglomeration as a driver of regional innovation is contingent upon a myriad of contextual factors, including the level of technological sophistication, institutional quality, and the availability of human capital. Regions endowed with higher levels of digital literacy and a conducive business environment are better positioned to harness the transformative potential of virtual agglomeration, thereby yielding enhanced innovation outcomes. Derived policy implications underscore the imperative of targeted interventions aimed at fortifying digital infrastructure and fostering synergistic collaborations within virtual agglomerative spaces. Policymakers are urged to prioritize investments in broadband connectivity, digital skills enhancement initiatives, and the formulation of supportive regulatory frameworks, thereby unlocking the full potential of virtual agglomeration as a catalyst for driving regional innovation. Moreover, fostering cross-sectoral collaborations and knowledge exchange initiatives within virtual agglomerative spaces can catalyze the emergence of vibrant innovation ecosystems, where firms, academia, and governmental entities converge synergistically to co-create and commercialize novel ideas. In summation, this study furnishes empirical insights into the intricate interplay between virtual agglomeration and regional innovation, thereby proffering actionable policy directives tailored to harnessing the latent potential of virtual agglomeration across China’s diverse regional landscape. By elucidating the multifaceted dynamics at play and delineating pragmatic pathways for leveraging virtual agglomeration, policymakers and stakeholders are equipped to steer regional economies towards unprecedented heights of prosperity and resilience in the innovation-driven global economy.

DOI

10.16315/j.stm.2024.03.005

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