Geopolitics and Innovation Decoupling: Impact of US Entity List on Chinese Firms
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In recent years, escalating geopolitical tensions between China and the United States—marked by the rise of techno-nationalism and de-globalization—have dramatically reshaped the global institutional landscape, posing unprecedented challenges for Chinese firms. According to this context, this project aims to examine how Chinese firms strategically adjust their innovation activities in response to escalating geopolitical tensions between the United States and China, particularly those shaped by techno-nationalism and de-globalization. We plan to focus on the phenomenon of innovation decoupling from U.S. technologies by analyzing three key dimensions: knowledge sourcing, technology combinations, and invention content. Drawing on a longitudinal dataset of Chinese firms listed on the Growth Enterprise Market (GEM) and the Science and Technology Innovation Board (STIB), we plan to employ a staggered difference-in-differences model to identify the causal effects of industry peer entity listing events on firms’ innovation strategies. To further explore the heterogeneity in strategic responses, we will apply unsupervised machine learning methods, such as K-means clustering, to identify patterns across firms, and focus on firm-level outcomes such as total factor productivity (TFP), Tobin’s Q, and return on invested capital (ROIC).This study aims to contribute to the literature on innovation, geopolitical risk, and firm performance by providing a comprehensive analysis of how firms in emerging markets adapt their innovation strategies under institutional and geopolitical pressures. It will also introduce methodological improvements in capturing technological recombination, enhancing the measurement of invention novelty and conventionality.
Principal Investigator (PI): Jiatao Li
Department/ Division: Management
This project is funded by the HKUST IEMS Research Grants 2025.
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