Computing power infrastructure and firm innovation: evidence from a quasi-natural experiment of China’s National Supercomputing Centers

Computing power has emerged as a critical driver of firm development, prompting governments worldwide to prioritise the construction of its infrastructure. Exploiting the staggered rollout of China’s National Supercomputing Centers (NSCs) as a quasi-natural experiment, we find that computing power infrastructure significantly increases both the quantity and quality of firm innovation. Three mechanisms underlie this effect: upgrading labour force composition, mitigating agency costs, and enhancing knowledge diversification. We corroborate these channels with illustrative case evidence, including the talent training initiatives of Shandong Dai Microelectronics, the computational applications deployed at the Xi’an NSC, and the cross-disciplinary knowledge integration at the China Automotive Technology and Research Center (CATARC). The positive effect is more pronounced in regions where local officials place greater emphasis on digital facilities and in industries characterised by more intense competition. This study contributes to the literature on the economic consequences of computing power infrastructure, enriches the application of innovation theory, and provides policy implications for optimising the supply of computing resources and advancing innovation-driven development.