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A blessing and a curse: Identifying how knowledge complexity influences regional innovation efficiency in the presence of varying spatial externalities

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  • Qin, Xionghe
  • Zhang, Dong
  • Wang, Song
  • Grimes, Seamus

Abstract

The dual nature of knowledge complexity on innovation manifests as a blessing and a curse, emerging when it positively affects innovation outputs while contributing to innovation costs. The knowledge complexity exerts heterogeneous effects on innovation efficiency by expanding the scope of knowledge recombination and increasing the difficulty of knowledge transfer. This study employs a spatial Durbin model to empirically examine the effect of knowledge complexity on regional innovation efficiency by utilizing a dataset from 285 prefecture-level cities in China from 2004 to 2018. The findings demonstrate that knowledge complexity has a significant “inverted-U” nonlinear effect on local knowledge creation efficiency but positive effect on local technology transfer efficiency. The spatial spillover effects in both knowledge creation and technology transfer efficiency across adjacent cities suggest a considerable likelihood of convergences in innovation efficiency. Moreover, this study indicates a nuanced effect of knowledge complexity on regional innovation efficiency, contingent on the presence of varying spatial externalities. The positive moderating effect of inter-regional network externalities and knowledge complexity on knowledge creation is observed, coupled with the mediating role of local agglomeration externalities and knowledge complexity on technology transfer.

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  • Qin, Xionghe & Zhang, Dong & Wang, Song & Grimes, Seamus, 2025. "A blessing and a curse: Identifying how knowledge complexity influences regional innovation efficiency in the presence of varying spatial externalities," China Economic Review, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:chieco:v:91:y:2025:i:c:s1043951x25000744
    DOI: 10.1016/j.chieco.2025.102416
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