The Geography of Digital Innovation: Big Tech, Digital Capabilities and Regional Economic Resilience

Abstract

Digital technologies are reshaping economies and places. Local digital capabilities have increasingly been viewed as a critical source of competitive advantage for regions and countries. Understanding where such capabilities emerge and how they are spatially organized, i.e., the geography of digital innovation, has therefore become a central concern. While existing research has increasingly examined the geographical patterns of digital innovation outputs, the expansion of key actors, especially large technology companies in the digital field (i.e., Big Tech), remains insufficiently understood. In addition, the relationship between these digital capabilities and regional economic resilience remains understudied. In response, this thesis examines the geographical expansion of Big Tech and the economic consequences of regional digital capabilities, thereby advancing the understanding of the geography of digital innovation. The overarching research question is: How is digital innovation distributed across space, particularly through the geographical expansion of Big Tech, and how are regional digital capabilities related to economic resilience? Chapter 2 focuses on the global expansion of Big Tech’s inventions, investigating the location strategies of its core and applied R&D. Core R&D refers to basic building blocks of Fourth Industrial Revolution inventions (e.g., software). Applied R&D involves the application of these technologies across various sectors (e.g., vehicles), making it more recombinant and original. Using patent application data from five leading Big Techs (i.e., Alphabet, Amazon, Apple, Meta, and Microsoft) between 2010 and 2021, it analyzes how the location strategies of their global R&D in 42 OECD member and key partner countries relate to host-country factors. The results show that core R&D is more likely to be located in countries with strong technology similarity to ICTs, whereas applied R&D tends to be located in countries with complementary technological capabilities. Moreover, stronger regulatory institutions amplify the role of technology similarity for core R&D, yet have a limited influence on applied R&D. Chapter 3 covers the application side of digital innovation, exploring the geographical patterns of Chinese Big Tech’s domestic expansion. This chapter systematically maps the domestic expansion of major Chinese Big Techs (i.e., Baidu, Alibaba, and Tencent) across three channels: organizational (subsidiary establishment), capital (corporate venture capital investments and acquisitions), and knowledge (scientific collaborations). The mapping reveals that these firms consistently prefer large cities for expansion, with an overall concentration in eastern and southern China. However, spatial patterns vary across expansion channels. Subsidiaries favor major economic or administrative centers, capital investments are strongly concentrated in headquarters cities, and scientific collaborations cluster around cities with leading research institutions. Chapter 4 shifts the focus to regional impacts of digital innovation, examining the relationship between digital capabilities and regional economic resilience. This chapter conceptualizes digital capabilities as multidimensional, including digital invention, digital business activity, digital market, and digital infrastructure. Using data from 272 Chinese cities, it examines how multi-dimensional digital capabilities influence regional resistance and recoverability during the COVID-19 pandemic. Results show that digital capabilities do not necessarily enhance short-term resistance. However, certain dimensions, particularly digital business capabilities, significantly support the recovery of regional economies.