Cross-regional operations and firm innovation performance: Boundary effects

In the context of building a unified national market and promoting an innovation-driven development strategy, the role of firms’ cross-regional operations in optimizing resource allocation and enhancing innovation performance is attracting increasing attention. Regional development imbalances, local protectionism, and market segmentation limit firms’ access to innovation factors, such as technology, talent, and capital, in their home regions. Establishing subsidiaries in different regions and engaging in cross-regional operations have become important ways for firms to overcome resource bottlenecks and reshape their competitive advantages. Using data on Chinese A-share listed firms from 2007 to 2022, this study shows that cross-regional operations significantly improve firms’ innovation performance and that this effect operates mainly through two types of boundary effects. First, cross-regional operations reshape firms’ power boundary by weakening their dependence on a single local government and market, enhancing autonomy and bargaining power in resource acquisition and strategic decision-making. Second, cross-regional operations optimize firms’ efficiency boundary by reconfiguring production and supply-chain networks across regions, reducing transaction and coordination costs, and improving the organizational and allocative efficiency of innovation activities. Heterogeneity tests reveal that this positive effect is greater for mature firms, firms facing lower environmental uncertainty, and firms whose top managers exhibit stronger attention to innovation. These findings enrich the literature on the antecedents of firms’ innovation performance from a cross-regional perspective and help guide firms in optimizing their cross-regional layout and enhancing innovation capacity as part of building a unified national market.