Abstract: Accelerating the development of the digital economy to establish China as a technologically advanced nation constitutes a strategic imperative for high-quality development. This study investigates the intrinsic relationship between the digital economy and technological innovation. Based on big data from industrial and commercial registrations, we measure digital economy agglomeration and examine its mechanisms on regional enterprise innovation. Empirical results demonstrate that digital economy agglomeration significantly promotes enterprise innovation output. Mechanism analysis reveals that knowledge spillover effects and cost-saving effects serve as primary channels through which agglomeration fosters innovation. The innovation-enhancing effect is more pronounced for smaller enterprises, non-state-owned enterprises (non-SOEs), and those operating in regions with lower market segmentation. This research validates the critical value of digital economy development and agglomeration from an innovation perspective, offering significant policy implications for enhancing, optimizing, and expanding the digital economy while advancing innovation-driven development.

Key words: digital economy, industrial agglomeration, externalities, enterprise innovation