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Does smart city benefit open innovation? firm-level evidence from China

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  • Cui, Huijie
  • Hu, Hongyan
  • Liang, Shangkun

Abstract

Open innovation offers great promise for firms seeking long-term competitiveness, but the challenge of balancing openness with control often hinders collaboration. This study investigates whether smart city pilot policies can alleviate the “paradox of openness” and foster collaboration. Using firm-level data, we find that firms located in smart city pilot areas are more likely to engage in collaborative innovation and produce a higher level of joint innovation output and quality. The mechanism lies in the stronger support and coordination between governments and firms in these cities, which lowers the barriers to external cooperation. Cross-sectional analyses show that the effect varies across different external factors. We also demonstrate that the policy's promotional effect has a lasting impact. Overall, these findings highlight the role of smart city policy in unlocking the full potential of open innovation.

Suggested Citation

  • Cui, Huijie & Hu, Hongyan & Liang, Shangkun, 2026. "Does smart city benefit open innovation? firm-level evidence from China," Economic Modelling, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:ecmode:v:155:y:2026:i:c:s0264999325004481
    DOI: 10.1016/j.econmod.2025.107453
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