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361Industrial chain linkages reflect the extent of production specialization and underpin the deep integration of resources. China’s industrial chains exhibit structural deficiencies. In response, the government advocates leveraging new technologies and business models to upgrade traditional industrial chains and harnessing large-scale, forward-looking, and innovation-driven demand to spur chain expansion. How does breakthrough innovation shape industrial chain linkages? This paper theorizes the “division of labor reshaping” effect of breakthrough innovation and provides empirical evidence using patent and input-output data of China’s A-share listed companies from 2007 to 2021.
The central mechanism through which breakthrough innovation strengthens industrial chain linkages is the creation of new cooperative demand. First, breakthrough innovation enables preemptive technological entry, reconfiguring competitive advantages and production allocation capabilities, diversifying supply chain configurations, and generating new cooperative demand. Second, the technological spillovers inherent in breakthrough innovation attract related and cross-sectoral actors seeking technological alignment, fostering spillover-induced cooperative demand. Third, new technologies generate resource gaps that enterprises bridge by expanding cooperative engagement across industrial segments, thereby producing expansion-driven cooperative demand and broadening business scopes.
The study finds that breakthrough innovation significantly promotes industrial chain linkages, and this effect exhibits significant long-term persistence. Mechanism testing indicates that after enterprises undertake breakthrough innovation, they enhance industrial chain linkages by establishing their competitive advantages, generating external technology spillovers, and reconstructing cooperative relationships. Additional analysis reveals that the promotion effect is more pronounced in enterprises with lower initial levels of industrial chain linkages, non-technology-intensive enterprises, state-owned enterprises, and larger-scale enterprises.
The main contributions of this paper are as follows: First, it shifts the focus from the conventional “friction-mitigation” paradigm to a demand-creation perspective and provides an alternative analytical framework, enriching the literature on industrial chain linkages. Second, it reveals the mechanisms from the perspective of enterprises’ active linkage reconstruction, expanding the research on the economic consequences of breakthrough innovation. The findings offer both theoretical advancements and empirical guidance for innovation-driven industrial chain evolution.
