How does digitalization drive urban industrial locations? An empirical examination of South Korea's experience

This study offers a novel empirical examination of the interplay between industrial digitalization and urban spatial dynamics, addressing a significant gap in the existing literature. Using data from 1609 firms in South Korea and employing a generalized structural equation model, this study examines how digitalization influences industries' preferences for urban locations. It diverges from previous theoretical and intuitive approaches, by providing concrete data-driven insights. The role of digitalization in enhancing productivity and spatial efficiency is a critical outcome here, thereby encouraging industries to favor urban areas. It also reveals an unexpected nuance: digitalization does not directly correlate with clean production, challenging prevalent assumptions. By empirically validating the indirect pathways linking digitalization with urban industrial setting, this study contributes uniquely toward understanding technological advancements’ reshaping of urban industrial landscapes. This nuanced insight extends beyond the current discourse, emphasizing the indirect yet substantial influence of digitalization on industrial location choices. This marks a critical advancement in the academic examination of urban industrial dynamics. • Digitalization drives urban industrial location. • Firms' productivity and spatial efficiency boost from digitalization, favoring urban locations. • No direct link between digitalization and clean production. • Urban industry marked by high productivity, efficiency, and cleaner production.