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How to enhance the competitiveness of manufacturing enterprises using innovation is an important topic in theory and practice. Data from the world input-output table and the Chinese industrial enterprise database are used to study the difference in the influence of service transformation and product innovation on enterprise competitiveness. The authors show that (1) both service transformation and product innovation contribute to enhancing enterprise competitiveness, but the former has a better effect, and this conclusion is still valid after replacing variables and controlling for endogeneity, and and (2) the “competitiveness effect” of service transformation and product innovation has strong heterogeneity in urban administrative levels, GVC embedding location, and enterprise ownership. (3) As two different innovation methods, service transformation and product innovation have synergistic and balanced effects.

The Path Choice of Manufacturing Enterprises to Enhance Competitiveness: Service Transformation or Product Innovation?