Amidst the strategic context of promoting high-quality economic development, enhancing total factor productivity (TFP) has emerged as a central driver of economic growth. As a key production factor, capital allocation plays a decisive role in TFP improvement. In recent years, the Chinese government has actively facilitated cross-regional capital flow through deepening factor marketization reforms and dismantling administrative barriers, thereby supporting high-quality economic development. Within this framework, critical questions remain underexplored: Can cross-regional capital flow enhance firm-level TFP? Through what mechanisms does it operate? Do its effects vary across spatial scales, and how does regional integration moderate this relationship?

Grounded in the unified national market context, this paper systematically examines the impact of cross-regional capital flow on firm TFP and conducts empirical tests using data from Chinese listed firms and their cross-regional subsidiaries from 2013 to 2023. The findings reveal that cross-regional capital flow significantly improves firm TFP, with more pronounced effects among large firms, risk-tolerant firms, and non-high-tech industries. From the perspectives of resource allocation and operations, this paper identifies three primary mechanisms: optimizing capital and labor allocation, expanding knowledge breadth and technological innovation boundaries, and enhancing managerial capacity and governance environment. Further analysis demonstrates that inter-provincial and cross-city-cluster capital flows exert stronger effects on TFP, while regional market integration and new infrastructure integration positively moderate this relationship.

This paper offers three principal contributions: First, it extends the capital flow research to the domain of firm-quality development through a core competitiveness lens, revealing the micro-level value of capital factor liberalization. Second, by employing data from listed firms and subsidiaries, it elucidates the dual mechanisms through resource allocation and operation channels while identifying heterogeneous effects across firm characteristics and industrial attributes, providing targeted policy implications. Third, adopting a unified national market perspective, it dissects spatial-scale effects and the enabling role of regional integration, deepening the theoretical understanding of the relationship between factor flow and high-quality development.