Bidirectional Innovation Spillovers from Focal Firms to Upstream and Downstream Supply-Chain Firms: Evidence from China

This paper uses the supply-chain portfolio screened from the key industrial chains and focal firms announced by Chinese governments from 2009 to 2024 as the research sample to examine the bidirectional innovation spillovers from focal firms to supply-chain firms. The research results show that there are bidirectional innovation spillovers from focal firms to supply-chain firms. And the innovation spillover effect is asymmetric; that is, compared with the upstream supply chain, the innovation spillover from focal firms to supply-chain firms in the downstream supply chain is stronger. The mechanism test results show that focal firms can enhance the innovation level of upstream firms through the cooperative innovation mechanism, and can also enhance the innovation level of downstream firms through the knowledge spillover mechanism. This study not only enriches the existing literature on the spillover effects of innovation and the role of focal firms in the supply chain, but also provides empirical evidence and theoretical support for focal firms to play a core role, promote innovation in the supply chain and lead the overall development of the supply chain.