Tax incentives, supply chain spillovers, and enterprise technological innovation

This study examines the impact of tax incentives for upstream and downstream enterprises on the technological innovation of midstream enterprises from a supply chain perspective. By constructing an econometric model to examine A-share listed companies' financial data, supply chain information, and national tax survey data spanning 2010–2022, the study reveals that tax incentives for downstream enterprises significantly propel midstream enterprises' technological innovation and upgrading. Mechanism analysis demonstrates that tax incentives enhance downstream enterprises' profitability and order volume, subsequently increasing midstream enterprises' human capital and fixed asset investment, driving technological innovation. Furthermore, midstream enterprises that are nonstate-owned and operate in industries with low-concentration ratios (i.e., highly competitive environments) are more likely to improve technological innovation capabilities in response to tax incentives for downstream enterprises.