Top-down flow of innovation within industry

Innovation spillovers extend beyond individual firms, influencing industry-wide technological advancements. While prior research has primarily focused on spillovers within direct business relationships, broader industry-level spillover effects remain underexplored. This study investigates the role of large firms in driving innovation spillovers to small and medium enterprises (SMEs) using firm-level patent data from South Korean companies spanning 2001 to 2020. By classifying industry leaders based on sales and measuring their impact on SMEs’ innovation output, we demonstrate that large firms significantly enhance SMEs’ patent production and citation impact within their industries.