The Balancing Effect of Open Innovation Networks in the “Dual Circulation” of Chinese Enterprises: An Investigation Based on Digital Empowerment and Organizational Flexibility

Abstract

The development of the digital economy is conducive to the innovative development of foreign trade and the formation of a “dual circulation” development pattern in China. However, the impact mechanism of the digital economy on dual circulation has not been fully explored. This study uses provincial panel data in China from 2011 to 2020 to analyze the direct, indirect, heterogeneity, transmission mechanisms, and spatial spillover effects. The results show that digital economy contributes greatly to dual circulation, with technological innovation capabilities serving as the most influential mechanism. Moreover, the spatial Durbin model is used to explore the effect mechanism, which indicates that the degree of dual circulation is affected by digital economy's spillover impact. The study concludes that technological innovation is one of the important mechanisms for digital economy to impact dual circulation. These findings demonstrate the importance of digital economy in fostering dual circulation and sustainable growth, in which technological innovation can play a critical role.