The effect of urban capacity in knowledge recombination on digital economy development

Knowledge has become a crucial and foundational resource for the development of the digital economy. Employing a fixed-effects panel model and drawing upon panel data from 279 Chinese cities from 2014 to 2019, this study empirically investigates the differential impacts of two distinct knowledge recombination activities—recombinant reuse and recombinant creation—on the development of the digital economy at the city level. Additionally, the moderating role of knowledge diversification in this relationship is explored. Our findings reveal that recombinant reuse exerts a negative influence on urban digital economy development, whereas recombinant creation demonstrates a positive influence. Furthermore, this study observe that knowledge diversification plays a positive moderating role in the relationship between the two divergent types of knowledge recombination and urban digital economy development. The finding suggests that a higher degree of knowledge diversification may exacerbate the detrimental impact of recombinant reuse on urban digital economy development in cities where such activities are prevalent. Conversely, cities that prioritize recombinant creation may accrue additional benefits for digital economy growth by fostering a diverse knowledge base. This study emphasizes the significance of knowledge recombination types and knowledge structure features in digital economy development. It contributes to the enrichment of theoretical studies related to the digital economy and provides insights for policymakers in cities to formulate appropriate digital economy development strategies based on local knowledge production mechanisms.