Invisible data infrastructure and cross-domain digital innovation: Evidence from data groups in China

This study examines whether and how formalized data governance reshapes firms’ digital innovation by exploiting the staggered establishment of municipal data groups in China. Using a difference-in-differences design and Chinese A-share listed firms from 2008 to 2024, we find that municipal data group establishment significantly expands firms’ cross-domain digital innovation. This effect is stronger among state-owned enterprises, regulated industries, firms in cities with lower technological complexity, and regions with more developed market and factor environments. Additional analyses provide evidence consistent with several potential pathways: municipal data groups are associated with changes in R&D uncertainty, managerial innovation expectations, interregional collaboration, and innovation activities. Further analysis reveals a quantity–quality divergence: data group establishment increases patent output but is associated with lower average measured patent quality, particularly among firms receiving stronger innovation incentives. This pattern is consistent with multiple explanations, including incentive responses and innovation composition changes. By conceptualizing municipal data groups as Invisible Data Infrastructure, this study advances research on digital governance and corporate innovation by showing how institutionalized data access and coordination mechanisms expand firms’ innovation boundaries.