State-Level Urban Agglomeration and Enterprise Innovation: A Quasi-Natural Experiment

Abstract

Based on the data of listed enterprises in China from 2007 to 2019, this study uses the quasi-natural experiment method (staggered DID) to explore the actual impact of the establishment of state-level urban agglomeration on the innovation activities of enterprises and the heterogeneous impact caused by regional differences. It is found that state-level urban agglomerations play the role of “incubator” for enterprise innovation, and the establishment of urban agglomerations can not only effectively encourage enterprises to increase R&D investment, but also greatly increase the quantity of innovation output of enterprises. It is worthwhile to note that the establishment of state-level urban agglomerations has no significant impact on R&D investment and the innovation output of enterprises in the eastern region. As far as the western region is concerned, the incentive effect of the establishment of urban agglomeration on the innovation output of enterprises is significantly positive at 1% significance level, while the incentive effect on the R&D investment of enterprises is positive but not statistically significant.

A quasi-natural experimental study on enterprise innovation driven by urban agglomeration policies in China

“…Zhao et al . 21 analyzed the impact of establishing urban agglomerations on innovation by utilizing data from Chinese listed companies and employing quasi-natural experiment methods. They found that the establishment of national-level urban agglomerations encouraged enterprises to increase R&D expenditure and enhances their innovation output.…”