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

Understanding how cities function as innovation incubators within increasingly interconnected economies is crucial for sustainable development. This study investigates how a city’s centrality within an enterprise-derived network shapes its technological innovation capabilities and underlying mechanisms. We construct an interlocking network model based on extensive corporate linkage data for Chinese cities. Using panel data analysis, we assess the impact of degree, closeness, and betweenness centrality on urban innovation capacity, examining mediating pathways including R&D human capital accumulation and innovation factor flow. The findings confirm that network centrality significantly enhances innovation capacity. Notably, degree and especially closeness centrality strongly promote both the accumulation of local R&D personnel and inter-city knowledge flow. Betweenness centrality reveals a complex role, appearing to hinder local R&D personnel accumulation while simultaneously facilitating knowledge diffusion, acting as a “knowledge gateway”. This study demonstrates how network positions embedded in real economic ties shape urban innovation through distinct mechanisms, underscoring the need for centrality-sensitive policies to foster urban innovation ecosystems.