Abstract It is generally deemed that agglomeration in the downstream of supply chain can promote information interaction and organizational learning, strengthen the control power of core firms, and improve innovation performance. This paper argues that, customer geographic proximity may also lower the firm innovation performance under certain conditions, resulting in the “spatial lock-in” dilemma of innovation. Based on the data of China's A-share manufacturing listed companies from 2009 to 2017, the relationship between customer geographic proximity and firm innovation performance was investigated, and customer concentration and customer location diversity were included in the framework as contingency factors. The findings suggest that there is an inverted U-shaped relationship between customer geographic proximity and firm innovation performance. Within a certain threshold, customer geographical proximity performance promotes firm innovation performance, and beyond the threshold, customer geographic proximity inhibits firm innovation performance.There is no significant moderating effect of customer concentration on the relationship between customer geographic proximity and firm innovation performance. Diversity of customer locations strengthens the inverted U-shaped relationship between customer geographic proximity and firm innovation performance. The above conclusions reveal the law of firm innovation from the perspective of supply chain, form a good supplement to the research on the endogenous mechanism of firm innovation, and provide new insight into the influence mechanism of firm innovation performance.
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