Beyond Boundaries: How Public Service Integration Reconfigures Urban Networks to Foster Collaborative Innovation

• In Event: Policymaking Across Nations

Abstract

Introduction/Background: Within federalist or decentralized governance systems, significant variations in local policies often evolve into "institutional frictions" that impede factor mobility. While existing literature primarily focuses on direct Science and Technology (S&T) policies, the role of broader public service policies in driving regional innovation remains under-explored. As the global role of central governments transforms, understanding how sub-national public service coordination—as a potent indirect policy tool—can overcome "territorial fragmentation" to facilitate regional innovation has become a shared challenge for policy scholars. 

Purpose/Research Question: Moving beyond traditional S&T policy frameworks, this study investigates how Public Service Integration (PSI) policies influence collaborative innovation by fostering urban network evolution. We specifically address: (1) Can PSI effectively drive cross-boundary urban network evolution and collaborative innovation? (2) How does PSI, through functional integration, catalyze network advancement and cross-regional capital flows? (3) Under what institutional conditions can these "non-technical" policy tools maximize collaborative innovation outcomes? 

Methods: This study first constructs inter-city network flow matrices based on the headquarters-branch linkages of listed firms to capture structural shifts in factor mobility, using inter-city co-patent applications as the indicator for collaborative innovation performance. Treating China’s PSI policy as a quasi-natural experiment, we employ a multi-period Difference-in-Differences (DID) model (2010–2022) to identify the net policy effect and conduct a mediation analysis to verify the functional role of urban network evolution in the policy transmission process. 

Findings: The findings reveal that PSI significantly narrows the gap in public service levels between cities. Specifically, "Cross-regional Business Streamlining" measures lead to a 7.07% increase in inter-city linkages and a 6.59% reduction in the average shortest path length. This enhanced connectivity facilitates knowledge spillovers, resulting in an 11.12% boost in co-patent applications. Heterogeneity analysis shows a robust "catch-up effect" for marginalized cities with larger initial disparities in service levels and network positions. 

Conclusion/Implications: This research elucidates the causal logic chain of "Policy Coordination — Network Reconfiguration — Innovation Output." A major innovation of this study lies in its pivot from an S&T-centric analysis toward a broader public service perspective, confirming that Public Service Integration (PSI) serves as a vital engine for collaborative innovation. This demonstrates that while policy divergence is inherent in decentralized systems, local governments can strategically employ "functional integration" policy tools—such as public service coordination targeting factor mobility costs—to dissolve administrative barriers and decouple economic synergy from territorial constraints. The Chinese case of PSI vividly illustrates how the organic combination of "central coordination and local implementation" can effectively resolve collective action dilemmas in fragmented governance landscapes. These results offer vital insights for policymakers in fragmented regions on leveraging public service coordination as a strategic tool to eliminate administrative obstacles and optimize regional innovation ecosystems. Furthermore, it provides significant inspiration for federalist nations to utilize interstate compacts or reciprocity policies to nurture regional innovation by optimizing the foundational institutional environment.

Author

• XIAOFAN ZHANG, Harbin Institute of Technology
  Presenting Author