Abstract
PurposeComplex technology not only provides potential economic benefits but also increases the difficulty of application. Whether and how upstream technological complexity affects downstream manufacturers' innovation through vertical separation structure is worth discussing, but it has not been effectively discussed.Design/methodology/approachThrough theoretical analysis and empirical testing, this article discusses the cost effect and market competition effect caused by upstream technological complexity on downstream manufacturers and further elucidates the impact of upstream technological complexity on downstream manufacturers' innovation.FindingsResearch has found that the impact of upstream technological complexity on the downstream manufacturers' innovation depends on the cost effect and market competition effect. The cost effect caused by the complexity of upstream technology inhibits the innovation of downstream manufacturers. In contrast, the market competition effect promotes the innovation of downstream manufacturers. There are differences in the cost effect and market competition effect of upstream technological complexity on different types of downstream manufacturers, so there is also significant heterogeneity in the impact of upstream technological complexity on innovation of different types of downstream manufacturers.Originality/valueThe conclusions of this article improve the understanding of the relationship between upstream technological complexity and downstream innovation and provide helpful implications for industrial chain innovation.