Information infrastructure, knowledge spillover, and technological innovation — Evidence from the internet penetration rates of emerging market

Information infrastructure serves as a critical material foundation for industrial innovation, a role that has been amplified by widespread Internet penetration in the information age. This study examines the effect of information infrastructure, proxied by Internet penetration rates, on technological innovation in China over the period 2007–2022. We identify a significant positive causal relationship, whereby improved information infrastructure not only increases patent output but also enhances the quality of innovation. Our mechanism tests indicate that knowledge spillovers are a primary channel through which infrastructure fosters corporate innovation. The heterogeneity analysis suggests that the effect is significantly more pronounced in regions with stronger intellectual property rights and lower industrial concentration, with high-tech industries deriving the most significant advantage. We also find that information infrastructure promotes exploitative innovation, patent diversity, and technological proximity, but has no statistically significant effect on exploratory innovation. The study concludes with targeted policy implications for enhancing technological innovation among firms in developing countries.