Impact of Digital Cluster Effect on the Total Factor Productivity of Manufacturing Firms: Evidence From China

The digital cluster effect plays a key role in driving firm digital transformation and enhancing total factor productivity (TFP), thereby promoting high-quality development of firms. This study uses data from listed manufacturing firms in Shanghai and Shenzhen A-share markets in China from 2007 to 2024, and uses a fixed-effect model to empirically study the impact of China’s digital clustering effects on TFP of firms, as well as the mechanism and effect differences. The study finds that the digital cluster effect of manufacturing firms can significantly improve the TFP of firms. Based on the test of mediating effect, it is found that the development of digital cluster effects can have a positive impact on TFP by promoting the quantity and quality of technological innovation. Heterogeneity analysis shows that in the eastern region, the digital cluster effect has a significant positive promoting effect on TFP, while it is not significant in the central and western regions. In high-competitive industries, the digital cluster effect has a significant positive promoting effect on TFP, but in low-competitive industries, this effect is not significant. For non-state-owned firms, the digital cluster effect has a significant positive promoting effect on TFP, but this effect is not significant for state-owned firms. This study focuses on the impact of digital clusters on productivity. The findings of this study will provide valuable policy recommendations and insights for improving the efficiency of firms.