Disembedding and redirection: The impact of technology blockade shocks on AI technology bias and economic effects

The escalation of U.S. technology blockades against China raises a critical question for innovation policy: do external technological constraints reshape the direction of corporate innovation? This paper examines the impact of technology blockade shocks on the proportion of artificial intelligence innovation among Chinese listed companies. Using a text-based technology blockade perception index constructed from the MD&A sections of annual reports, combined with firm-level patent data, we find that heightened technology blockade perception significantly increases firms' AI technology bias. This finding remains robust across a series of sensitivity checks and instrumental variable estimation. Mechanism analysis reveals that executive innovation awareness and government subsidies serve as positive channels promoting AI innovation reorientation, while managerial myopia partially offsets this effect. Heterogeneity analysis indicates that the innovation redirection is more pronounced among non-state-owned enterprises, large firms, and firms located in eastern China. Further analysis shows that AI technology bias is negatively associated with current market valuations, reflecting the temporal mismatch between investment and payoff inherent in emerging general-purpose technologies. These findings offer new insights into how firms strategically redirect innovation portfolios under external technological constraints, with implications for innovation policy design in the context of technology decoupling.