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Firms’ Position in the Supply Chain Network, R&D Input, and Innovation Output: Striving for the Top or Settling in the Corner? Implications for Sustainable Growth and Adaptive Capacity

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  • Le Cheng

    (Department of Financial Accounting, School of Business Administration, Quanzhou Campus, Huaqiao University, Quanzhou 362021, China)

  • Liyuan Wu

    (Department of Financial Accounting, School of Business Administration, Quanzhou Campus, Huaqiao University, Quanzhou 362021, China)

Abstract

This study examines the potential constraints that firms may face when occupying central positions within supply chain networks, particularly in terms of innovation. While prior research highlights the benefits of centrality for resource acquisition and knowledge flow, our findings suggest that such positioning can, under certain conditions, hinder innovation. Using unbalanced panel data from Chinese A-share listed firms in Shanghai and Shenzhen (2009–2021), we conduct an empirical investigation into this effect, incorporating the mediating role of R&D investment and the moderating influence of ownership structure. The analysis reveals that supply chain network centrality has a significantly negative impact on total innovation output, invention patents, and low-end patents, with all effects statistically significant at the 0.001 level. This adverse impact is particularly pronounced in state-owned enterprises, where dependence on established networks further restrains innovation. These results suggest that supply chain centrality may hinder firms’ long-term innovation capacity, which could, in turn, weaken their sustainability by limiting their ability to adapt to technological change and evolving industrial environments. These findings suggest that policymakers could implement targeted incentives, such as R&D subsidies, to mitigate the innovation constraints faced by central firms. Meanwhile, corporate managers should adopt strategies like open innovation and supply chain diversification to sustain long-term innovation.

Suggested Citation

  • Le Cheng & Liyuan Wu, 2025. "Firms’ Position in the Supply Chain Network, R&D Input, and Innovation Output: Striving for the Top or Settling in the Corner? Implications for Sustainable Growth and Adaptive Capacity," Sustainability, MDPI, vol. 17(4), pages 1-24, February.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:4:p:1729-:d:1594550
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    References listed on IDEAS

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