Corporate Network Positions Shape Innovation in Chinese Cities

Cities occupying central positions in China’s interlocking corporate network have greater technological innovation capacity, according to a peer-reviewed panel study by Qingfeng Luo and Ruxi Ding. The analysis linked corporate relationships among Chinese cities to three measures of network centrality and found that more central positions were significantly associated with stronger innovation performance, although brokerage positions produced a different and more complex pattern.

To investigate how urban innovation develops within an interconnected economy, the researchers constructed a network of Chinese cities using extensive corporate-linkage data. They then applied panel-data models to examine the relationships among degree centrality, closeness centrality, betweenness centrality and urban innovation capacity. The study used multiple mediation pathways to assess whether network positions were associated with the accumulation of local research and development personnel, inter-city knowledge flow and the movement of innovation factors.

Degree and closeness centrality showed the clearest positive relationships with urban innovation. Both were also strongly associated with two mechanisms: a larger local population of R&D personnel and greater knowledge flow between cities. In other words, the network positions most favorable for technological innovation were linked to both the concentration of research talent and the circulation of knowledge. The results support the authors’ interpretation that a city’s position within real economic relationships can help shape the human-capital base and exchange of information available for innovation.

Betweenness centrality, however, did not follow the same pattern. Cities occupying brokerage positions were associated with weaker accumulation of local R&D personnel but stronger knowledge diffusion. Luo and Ding characterize these intermediary cities as “knowledge gateways”: they appeared to facilitate the transmission of knowledge across the corporate network without necessarily attracting a comparable concentration of research workers. This distinction suggests that a network position can support knowledge transfer while remaining less favorable for local R&D workforce growth.

The findings are based on panel analysis of Chinese cities and an enterprise-derived model of corporate connections, so they do not establish that network centrality alone causes innovation. The observational design cannot isolate centrality from every other feature of urban development, and the results concern the specific national setting and corporate-linkage network analyzed. Within those limits, the study shows that innovation capacity is associated not only with local research resources but also with a city’s structural role in an economic network. Degree and closeness positions were linked to both talent accumulation and knowledge flow, while betweenness positions combined knowledge brokerage with a less favorable local R&D personnel pattern.

Subject of Research: Corporate-network centrality and technological innovation capacity in Chinese cities

Article Title: Network centrality position shapes urban innovation capacities: evidence from China’s interlocking corporate network

Article References: Luo, Q., & Ding, R. (2026). Network centrality position shapes urban innovation capacities: evidence from China’s interlocking corporate network. Humanities and Social Sciences Communications. https://doi.org/10.1057/s41599-026-09344-9

Image Credits: AI Generated

DOI: 10.1057/s41599-026-09344-9

Keywords: urban innovation, corporate networks, network centrality, Chinese cities, knowledge diffusion, R&D personnel, panel data, interlocking ownership, innovation ecosystems, Network, centrality, position