Abstract:    Relocation is an adjustment strategy for firms to seek the optimal business location, which has been a classic topic in the field of regional economics. Relevant studies have investigated the spatial patterns and influencing factors of firm relocation and its impact on economic benefits, while few have discussed the effects of firm relocation on innovation performance. Based on the theoretical analysis of the relationship between firm relocation, firm characteristics and innovation performance, the hypotheses proposed are as follows: there is a positive correlation between firm relocation and technological innovation performance; the positive effect on manufacturing and non-high-tech firms is lower than that on service industry and high-tech firms; the effect on large firms is higher than small firms; the effect of non-state-owned firms is higher than state-owned firms; the effect on firms moving from urban areas to suburbs is higher than that of moving from suburbs to urban areas; the effect on firms moving into special economic zones is higher than that on firms moving out of zones.This paper used the annual survey data on technology firms collected by the Shanghai Science and Technology Committee (STCSM) during the period of 2011-2018, and the staggered difference-in-difference model. The dependent variable is the amount of intellectual property applications of firms in each year, and the independent variable is whether the firm had moved in each year. The model also controls firm characteristics including R&D labor, R&D expenditure and its quadratic term, income, asset, age, high-tech certification, firm fixed effects and time fixed effects. The model has satisfied the parallel trends assumption. The research results confirmed the hypothesis that firm relocation within Shanghai has a positive effect on their technological innovation performance, and investigates the heterogeneity of promoting effect. The main conclusions of the study are as follows: Firstly, regional environment affects the innovation behavior of firms, so firms relocate to regions with better innovation environment and knowledge spillovers for the purpose of maximizing innovation production. As a result, relocation within the city has a significant positive effect on firms′ innovation performance. The account of patent applications after relocation increased by an average of 6.4% compared with that before relocation. Further sub-sample research showed that relocation has different impacts on firms in different industries. The cost of migration for manufacturing firms is relatively large, and they are often passively relocated because of urban planning and government policy about industrial transformation and upgrading. Secondly, the research results confirmed the hypothesis that the effect of service industry is stronger than that of manufacturing firms. High-tech firms are less dependent on natural conditions such as land and energy, so it is relatively easy to transfer to advantageous locations in space and obtain superior innovation resources, and form more technological innovation output. Specifically, the account of intellectual property applications increased by 3.7% after the relocation of non-high-tech firms, while that of high-tech firms increased by 6.7%. After dividing our sample into micro, small, medium and large firms, the results showed that the larger the firms, the higher the technological innovation effect of their relocation. Larger firms have stronger ability to adapt to the environment and resist risks; for example, relocation has no significant impact on micro-firms, while it increases applications of large firms by 7.7%. Moving decisions of state-owned firms may be interfered by the government, which are not always correlated with their own interests and strategies. Thirdly, the research results showed that relocation has a higher effect on non-state-owned firms′ technological innovation increase, while it has no significant impact on state-owned firms. Moving to the suburbs and special economic zones makes a higher impact on promoting firm technological innovation, which is possibly because high operating costs of locating in urban areas decrease firms′ R&D input, and special economic zones provide a superior business environment and incentive policies for firms to innovate. To ensure that the results are robust, this paper constructed a subsample with more comparable treatment group and control group, with the propensity score matching method adopted. Additionally, the accurate discontinuity model was used to test the effect again, which has confirmed our results from the baseline regression.

Key words: firm relocation, technological innovation, technology firm, staggered difference-in-difference model