Abstract:      At present, Chinese manufacturing enterprises are still characterized as “large but not strong, clustered but not concentrated”, and the phenomenon of “dramatic increase in innovation investment” and “slow increase in total factor productivity” coexists at the data level. The role of innovation on the development of manufacturing enterprises has not yet reached a unanimous conclusion. Moreover, there is a lack of research on the long-term nature, contribution and heterogeneity of economic benefits generated by different innovation behaviors of enterprises, as well as the endogenous innovation dynamics of enterprises at this stage. Therefore, it is of practical and policy importance to examine the long-term effects and actual contributions of innovation activities of enterprises at this stage, as well as the feed-back effects of enterprise performance improvement on the scale and intensity of enterprise innovation and different innovation behavior choices, to test whether manufacturing enterprises are caught in the "innovation-driven development dilemma".This paper, based on the micro-data of Chinese manufacturing enterprises from 2007-2019, and based on the typical fact that the status of enterprises as innovation subjects has not been fully established, empirically examined whether Chinese manufacturing enterprises are caught in the "innovation-driven development dilemma" and its intrinsic causes from the perspective of endogenous innovation dynamics. The results of the study are as follows: first, there is an obvious downward pressure on the positive effect of innovation activities on enterprise performance in Chinese manufacturing enterprises at this stage, and the overall level of contribution is low, especially in terms of innovation intensity, indicating that the absorption and transformation capacity of enterprise innovation resources is insufficient, and the actual effect of enterprise innovation activities is not satisfactory, and innovation has not yet become the first driving force for the development of manufacturing enterprises. Second, at this stage, there is an obvious downward pressure on the positive effect of performance improvement on the scale of enterprise innovation in Chinese manufacturing enterprises, and even a negative effect on the innovation intensity, and the contribution is generally low, indicating that there is a lack of endogenous innovation dynamics in manufacturing enterprises. Third, the heterogeneity analysis confirms that these phenomena are more prominent in large enterprises and state-owned enterprises, while SMEs have relatively stronger endogenous innovation dynamics and can rely on fundamental innovation behaviors and the institutional dividend of the state "supporting MSMEs to become an important source of innovation", and have the ability and motivation to engage in basic research and original research from 0 to 1, and have the potential to become an important source of innovation.Therefore, this paper argued that for Chinese manufacturing enterprises at the present stage, due to the insufficient absorption and transformation capacity of enterprise innovation resources, low endogenous innovation dynamics, enterprises have not yet broken through the "innovation-driven development dilemma". There is much room for growth in the intensity of enterprise innovation investment and the participation of different innovation behaviors, and the potential economic effects of enterprise innovation activities are yet to be released. The policy implications of this paper are as follows: first, strengthening the absorption capacity of manufacturing enterprises to innovation resources, improving the utilization rate of innovation resources and alleviating the efficiency loss are the core issues to stimulate the potential economic effect of enterprise innovation and get out of the “innovation-driven development dilemma”. Second, lack of endogenous innovation dynamics and the "strategic slackness" attitude of large enterprises and state-owned enterprises are important obstacles for Chinese manufacturing enterprises to get out of such dilemma at this stage. Third, the innovation attitude of SMEs is “active and practical”, and their endogenous innovation dynamics are the important grasp for manufacturing enterprises to get out of the dilemma at this stage.

Key words: innovative activity, long-term effect, contribution, endogenous innovation dynamics