Distance still matters: digital communication technologies and innovation performance of innovative enterprises

The emergence of digital communication technologies (DCTs) has greatly changed the way of information transmission, reduced the cost of communication and expanded the space of information spread. A largely growing literature shows that the communication technologies development lead to 'the death of distance'. To verify this assertion, this paper empirically test the effect of DCTs on agglomeration premium measured by the innovation performance advantage. By using a large number of firm-level patent data from China, we find that the spread of DCTs does not reduce the innovation premium of agglomeration. Conversely, innovative enterprises agglomerated benefit from the utilization of DCTs. This article highlights the importance of agglomeration for innovation activity.