Research on the relationship between industrial agglomeration and regional innovation from the dynamic perspective: evidence from China

Purpose The purpose of this paper is to reveal the paradox between diversification and specialization from a dynamic perspective. More precisely, this paper will analyze the impact of diversification and specialization as well as their interaction on regional innovation in different development stages. Design/methodology/approach Based on the principles of new economic geography and innovation geography, data from 30 provinces from 2001 to 2017 was used to explore the relationship. Least squares regressions with fix effect were used to examine the hypotheses. Findings The results show that both diversification and specialization have a significantly and positive impact on regional innovation. The interaction of diversification and specialization also significantly and positively impacts regional innovation. The effect of industrial agglomeration is heterogeneity under different development stages. Practical implications This paper verifies the positive role of diversification and specialization and their interaction in promoting regional innovation. The impact of industrial agglomeration on innovation is dynamic and changes with the regional development process. Emerging economies should make appropriate industrial agglomeration strategies according to their development stages. Originality/value This paper introduces diversification, specialization and their interaction into the research framework at the same time to analyze their impact on innovation performance which deepened the research of industrial agglomeration. Taking China as an example, this paper also examines the impact of industrial agglomeration on regional innovation in different development stages that expands the dynamic perspective of industrial agglomeration.