Innovation is a necessary guarantee for sustainable development. Stepping into the digital age, digital transformation has triggered the innovation revolution. This paper takes 30 provinces in China from 2012 to 2022 as the research sample, we verify whether digital transformation has improved innovation performance. Based on the Solow growth model and agglomeration economics theory, we also explore the moderating role and threshold effect of agglomeration in productive service industry between digital transformation and innovation performance. To achieve this, we apply the methods of machine learning and text analysis to construct an evaluation index of regional digital transformation and measure it. The paper finds that China's digital transformation index is increasing, but there is a digital divide between regions. We also determine that digital transformation significantly and positively contributes to the level of innovation performance. Considering the threshold effect of agglomeration in productive service industry, the impact of digital transformation on innovation performance exhibits non-linear characteristics, As the level of agglomeration continues to exceed the threshold, the innovation-driven effect of digital transformation increases. The research results help clarify the relationship between digital transformation and innovation performance, and provide favorable policy directions for regional governments to identify digital divides and make reasonable industrial layouts. Thus, it can promote the construction of digital China and innovation power, injecting strong innovation force into the realization of SDGs.
