As the "new engine" of economic development, the service industry has become an important force driving the dual-cycle development at home and abroad. China's trade in services far exceeds that of the UK, Germany and other countries, and has ranked second in the world for eight years in a row. Although the overall proportion of China's service industry has increased in recent years, there is still a big gap between China's industrial development and that of developed countries. At present, the supply of producer services supporting industrial upgrading and high-quality consumer services driving demand growth is obviously insufficient. The problem of relatively low productivity has not been fundamentally changed. The innovative city construction, as an important measure to promote the goal of "leading innovative countries" in China, plays a key role in industrial upgrading and innovation driving. There is great guiding significance for the high-quality development of service industry and the construction of an innovation-oriented country by accurately evaluating the effect and mechanism of the construction of innovation-oriented cities .#br#Taking approved innovation-oriented cities as the research object, this study matches the panel data of China's prefecture-level cities from 2004 to 2020 with the data of A-share listed service enterprises in Shanghai and Shenzhen, and then constructs a multi-period differential model to study the impact of innovative city construction on the total factor productivity of service enterprises. First, this paper examines whether pilot policies can promote the productivity of listed service enterprises, and focuses on the time-delay and dynamic characteristics of innovative city construction. Secondly, the number of universities and night light index in history are used as instrumental variables to test the robustness of the benchmark conclusions. This study also tries to explore the main paths through which the pilot policy can affect the productivity improvement of service enterprises. Finally, according to the differences between the characteristics of enterprises and cities, it analyzes the differential impact of innovative city construction on the total factor productivity of service enterprises.#br#The main conclusions are as follows. (1) Compared with non-pilot cities, the construction of innovative cities is more conducive to the improvement of total factor productivity of service enterprises in pilot cities. After the robustness tests, such as the instrumental variable test, year-to-year matching test and placebo test, this conclusion remains valid. Besides, the innovative city construction has time-delay and long-term dynamic. (2) The mechanism test results show that the construction of innovation-oriented cities can boost the production efficiency of service enterprises in pilot cities by improving the capital allocation efficiency of service enterprises and improving the technological innovation level of service enterprises. Meanwhile,the innovative city construction can also improve the total factor productivity of service enterprises by accelerating the agglomeration of service industry in pilot cities and the collaborative agglomeration of service industry and manufacturing industry. (3) The heterogeneity results based on firm characteristics show that the policy effect of knowledge-intensive service enterprises and enterprises with low financing constraints is relatively obvious. In terms of the regional differences of service enterprises, innovative city construction has a strong policy effect on service enterprises in coastal cities and areas with a higher legal level.#br#Accurate evaluation of the effects of innovative city construction is of great guiding significance for China to become one of the most innovative countries by 2030. It also provides important inspiration for how to achieve high-quality development of China's service industry at the present stage. According to the research conclusion, this paper puts forward three countermeasures and suggestions. First, in order to give play to the role of resource agglomeration and talent and technology innovation in the construction of innovation-oriented cities, the government should actively foster an innovation and entrepreneurship ecosystem in pilot cities to achieve breakthroughs in generic technologies and key technologies. Second, it is essential to improve the financial support system and property rights protection measures. Local governments need to provide sound investment and financing channels for the development of the service sector and encourage healthy innovative competition among enterprises. Third, Chinese local governments and micro enterprises need to take advantage of the Internet and digitalization to promote the synergistic agglomeration of service industry and manufacturing industry.#br#