Industrial agglomeration, university-enterprise cooperation and enterprise innovation

Abstract

This paper constructs a fixed-effects model to investigate the relationship between industrial agglomeration, university-enterprise cooperation, and firm innovation using data from 2002–2019 on Chinese A-share listed companies in non-financial industries and the degree of regional agglomeration. The results of the benchmark regressions find that an increase in the level of regional industrial agglomeration reduces the innovation ability of firms, while university-enterprise cooperation enhances the innovation ability. At the same time, we find that university-enterprise cooperation plays a moderating role between industrial agglomeration and firm innovation, and university-enterprise cooperation can mitigate the decrease in innovation caused by industrial agglomeration. The above findings still hold after a series of robustness tests. Further, the results of heterogeneity tests show that the effects of industrial agglomeration and university-enterprise cooperation on firm innovation are influenced by the property rights and the location of the firm. The negative effect of industrial agglomeration on state-owned enterprises' innovation capability is more prominent in the eastern regions. However, the effect of university-enterprise cooperation on improving innovation capacity of non-state-owned enterprises is more significant in the western region.