High-quality innovation facilitates integrated development across upstream,midstream,and downstream firms,thereby fostering the construction of a more secure and stable supply chain system.This paper constructs a novel firm innovation quality index,using textual data derived from the invention patents of publicly traded companies.From the vantage point of supply chain dynamics,we further investigate the reciprocal spillover effects of enhanced innovation quality within focal firms for the business performance of their upstream and downstream counterparts.The empirical evidence suggests that an increase in the innovation quality of focal firms considerably bolsters the business performance of both their upstream and downstream counterparts.The findings remain consistent following sev-eral robustness checks,including alterations in both explained and explanatory variables,the incorporation of supplemen-tary fixed effects,the modifications to the clustering methodology,and the examination of lagged consequences,and the implementation of instrumental variables methods to further tackle endogeneity.The high-quality innovation of focal firms transmits the innovation effect to upstream and downstream firms through two channels:production and demand and financing spillover.From the production-demand viewpoint,innovation en-hances total factor productivity and profitability of focal firms,which,in turn,increases the demand for products from up-stream firms and accelerates the sales speed of downstream firms,thus improving the business performance of both up-stream and downstream firms.Furthermore,the improved innovation quality of focal firms provides more trade credit support for downstream firms.At this time,the operating costs of firms decrease and the business performance of the downstream firms improves.Meanwhile,the improved business performance of downstream firms generates demand for the focal firms as well as the upstream firms,in turn significantly improving the business performance of upstream firms.Furthermore,an increase in innovation quality within focal firms leads to a reduction in per-unit production costs.Consequently,downstream firms decrease their overall procurement expenditures by acquiring equivalent quantities of in-puts,which enhances their profitability if sales remain stable.This,in turn,improves downstream firms'business perfor-mance.Additionally,elevated innovation quality in focal firms refines the production process,imbuing the products with superior technological attributes.Downstream firms are thus inclined to purchase more innovative products,which con-tributes to the augmentation of their productivity and competitiveness.Ultimately,this positively impacts the business per-formance of downstream firms.In addition,the spillover effects of the innovation quality of focal firms exhibit substantial differences across differ-ent firms and industries.The spillover effects are more pronounced when focal firms are of large scale,state-owned,highly dependent on the supply chain,or in highly competitive industries.The conclusions carry important policy implications for innovation-driven integration and development of upstream and downstream firms,promoting the security and stability of industrial and supply chains,and alleviating the operational difficulties of firms.We should persistently enhance firm innovation quality,exploit its supply chain spillover effects,and capitalize on the diverse innovation roles of various firms.By clarifying the innovation functions of various types of firms within the supply chain,we can reinforce the industrial chain and supply chain system through high-quality technological innovation,maintain economic security,and achieve high-quality economic development.
High-quality InnovationSupply Chain TransmissionFirm Business Performance
万方数据
维普
