This study aims to examine whether local agglomeration of cloud service providers is associated with manufacturing firms’ public cloud adoption. The authors argue that provider clusters matter through two related pathways: stronger local competition that lowers adoption frictions, and denser local knowledge environments that support managerial sensemaking around cloud technologies.
The authors combine city-level registration records of cloud service providers with panel data on listed manufacturing firms in China. Firm-level public cloud adoption is identified from annual-report disclosures on major events. Cloud-related discussion intensity in Management Discussion and Analysis (MD&A) is used as an indirect indicator of managerial attention and cloud-oriented sensemaking. The authors estimate high-dimensional fixed-effects models, use alternative agglomeration measures and address endogeneity with instrumental-variable designs. The authors also examine whether provider agglomeration strengthens the productivity effect of cloud adoption.
Local provider agglomeration is positively associated with manufacturing firms’ public cloud adoption. The effect is stronger when local provider ecosystems move from thin markets to denser clusters and among firms that are more financially constrained. Provider agglomeration is also positively associated with cloud-related discussion in MD&A, consistent with greater managerial attention to cloud technologies. In addition, provider agglomeration strengthens the positive association between cloud adoption and firm productivity.
This study contributes to knowledge management research by showing how localized provider ecosystems shape digital technology adoption. It develops a dual-pathway framework in which competitive discipline and knowledge brokerage jointly affect firms’ access to, interpretation of and adoption of external digital knowledge.
