["Review of Development Economics, Volume 30, Issue 2, Page 1120-1137, May 2026. ", "\nABSTRACT\nCultural diversity plays an important role in regional innovation and is increasingly receiving attention from scholars and policymakers. This paper adopts dialects as representatives of culture. Using panel data from 85 cities in China, between 2007 and 2023, this paper empirically studies the relationship between dialect diversity and technological innovation from the perspective of the two‐stage value chain of innovation. The main conclusions are as follows: First, dialect diversity has an inverted U‐shaped relationship with innovation in the R&D stage and a linear negative correlation with innovation in the achievement transformation stage. Second, the Mandarin penetration rate, as a counterfactual proxy variable for dialect diversity, exhibits a U‐shaped relationship with innovation in the R&D stage and a linear positive correlation with innovation in the achievement transformation stage; the counterfactual estimation result is robust. In addition, using terrain slope as an instrumental variable, the regression results are also robust. Third, moderate dialect diversity is more conducive to R&D innovation in eastern cities, while excessive dialect diversity is even less conducive to R&D innovation in central and western cities. Dialect diversity has a stronger inhibitory effect on the transformation of innovative achievements in central and western cities. Moderate dialect diversity is more conducive to R&D innovation in cities with a high degree of openness to the outside world, while excessive dialect diversity is less conducive to R&D innovation in cities with low levels of openness to the outside world. Dialect diversity has a stronger inhibitory effect on the transformation of innovative achievements in cities with low levels of openness to the outside world. Finally, this paper proposes policy recommendations to promote regional innovation development from the perspectives of cultural governance and innovation management.\n"]