Industrial Agglomeration and Enterprise Innovation Sustainability: Empirical Evidence from the Chinese A-Share Market

Abstract

The data from 285 prefecture-level cities in China are selected as research samples from 2005 to 2021, using the panel data of listed companies. The empirical study examines the impact of regional industrial agglomeration levels on enterprise innovation sustainability and its heterogeneity effects. The findings reveal that industrial agglomeration in the manufacturing sector significantly hampers enterprise innovation sustainability, while agglomeration in the producer services sector promotes it. Mechanism analysis demonstrates that industrial agglomeration affects enterprise innovation sustainability through the micro-conductive mechanism of financial constraints. Heterogeneity analysis shows that the impact of manufacturing agglomeration on enterprise innovation sustainability is more pronounced in technology-intensive and high-end technology industries, whereas the impact of producer services agglomeration varies significantly in knowledge-intensive and resource-intensive industries. Furthermore, heterogeneity analysis suggests that the influence of industrial agglomeration on enterprise innovation sustainability varies according to different firm characteristics. These research findings contribute to a deeper understanding of the microeconomic effects of industrial agglomeration and expand the research perspective on the internal mechanisms and external factors driving sustainable corporate innovation.