Export restrictions and the rise of basic research: how chip controls influence Chinese firms’ research orientation

Purpose This study aims to examine whether and how US semiconductor export controls reshape Chinese firms’ research orientation by promoting a strategic shift toward basic research. Beyond assessing the direct effect of export controls, it further seeks to uncover the organizational mechanisms, such as resource reallocation, technological realignment and talent restructuring, through which policy shocks influence firms’ basic research engagement. Design/methodology/approach Using panel data of Chinese listed firms from 2010 to 2024, the paper employs a multi-period difference-in-differences framework to estimate the causal effect of export control exposure on firms’ basic research engagement. The empirical design accounts for firm-level heterogeneity, industry fixed effects and regional policy environments to isolate the policy-induced variation. Findings We find that export controls significantly increase firms' investment in basic research. Among the mediating channels, technological realignment emerges as the most influential pathway, followed by talent restructuring, while resource reallocation plays the weakest role. Research limitations/implications The findings imply that geopolitical restrictions, while designed to constrain technological upgrading, may unintentionally foster long-term innovation capacity in the targeted economy. For managers, the results highlight the strategic importance of strengthening scientific research collaboration and talent structures under external uncertainty. For policymakers, the evidence underscores the need to build complementary domestic support systems that can transform external shocks into opportunities for capability upgrading. Originality/value This study contributes to the literature on innovation under geopolitical constraints by theorizing and empirically validating three organizational mechanisms – resource reallocation, technological realignment and talent restructuring – through which external policy shocks reshape firms’ basic research orientation. It offers new evidence on how external shocks shape long-term innovation capabilities in emerging economies, shedding light on the interplay between global policy tensions and national efforts toward technological autonomy.