How does the development of the digital economy affect innovation output? Exploring mechanisms from the perspective of regional innovation systems.

• This paper identified the innovation networks and innovation environment as the core components of the regional innovation system. • A two-region, three-sector New Economic Geography model is developed by integrating the digital economy, innovation cooperation, R&D elements flow, and innovation output into a unified framework. • Digital economy promotes innovation output through promoting intra-regional and inter-regional cooperation and attracting the flow of R&D elements personnel and capital. • Underdeveloped cities benefit more from digital economy, while large central cities function as conduits and generate spillover effects to interconnected regions. This paper explored the paradigm shift in spatial innovation dynamics driven by the rapid emergence of the digital economy (DIGE) through the lens of the regional innovation system (RIS). By integrating DIGE, RIS, and innovation output into a unified analytical framework, this study examined the impact and mechanisms of DIGE on innovation output across 330 Chinese cities from 2011 to 2020. Results show that DIGE development significantly contributes to innovation output. This contribution is mediated by DIGE's strengthening of the RIS, primarily through its facilitation of integration into innovation networks and enhancement of the innovation environment. Regional heterogeneities are evident in the innovation-promoting influence of DIGE, with less developed cities, cities with underdeveloped infrastructure, and smaller cities benefiting more significantly. While the direct impact of DIGE on large central cities is subtle, their pivotal positions enable them to radiate and disseminate innovation spillovers to connected cities through extensive cooperative networks. This study underscored the potential of leveraging DIGE, especially in disadvantaged regions, to cultivate robust and synergistic RIS and act as catalysts for augmented innovation output. [Display omitted] [ABSTRACT FROM AUTHOR]