The Impact of Geopolitical Shocks on the Sustainability of Corporate Innovation

This study examines whether placement on the U.S. Entity List affects the persistence of corporate innovation. Drawing on 19,496 firm-year observations of Chinese A-share manufacturers from 2014 to 2023, we find that Entity Listing significantly increases innovation persistence. Mechanism analyses reveal that this effect is driven by sustained R&D investment and more diversified collaboration networks. Moreover, the treatment effect is more pronounced among non-state-owned, high-technology, and highly profitable firms. Our findings suggest that geopolitical shocks can catalyze medium- to long-term adaptive responses, operating through complementary internal resource commitment and external network reconfiguration.