Digital infrastructure and innovation: Digital divide or digital dividend?

Abstract

With more activities being moved online during the COVID-era, digital infrastructure, as a public service, is now playing a greater role in influencing innovation and making the symbiotic relationship between innovation subjects closer. While the surge in patenting in China is associated with a significant innovation gap, there is noticeable regional disparity in digital infrastructure. This study investigates whether the digital infrastructure divide widens the innovation gap in the context of the innovation ecosystem. Based on the entropy weight method, a comprehensive index of digital infrastructure was constructed using provincial panel data from China for the years 2013 to 2018. The findings suggest that the digital infrastructure divide widens the innovation gap; however, this gap can be narrowed by upgrading the industrial structure. The relationship between different regions in China involves both competitive and reciprocal symbiosis. The mediating effect of the industrial structure in the eastern region is smaller than that in the non-eastern region. Moreover, the digital infrastructure divide has a disadvantage for late adopters when digital infrastructure falls below a specific threshold. Once this threshold is crossed, its impact changes from a digital divide to a digital dividend.

These findings have several theoretical implications. In digital economy literature, our support for comprehensively assessing the level of digital infrastructure is noteworthy. In innovation ecosystem literature, the broad framework that encompasses the evolution of innovation, including digital infrastructure and industrial structure, is significant. This study highlights the digitization of the innovation ecosystem and offers practical implications for narrowing the innovation gap between researchers, individuals, and policymakers.