The economy is facing transformation and technological upgrading, which is particularly imperative to upgrading the real economy in China. It is well known that manufacturing is the core of the real economy. Therefore, insights into the innovation path of manufacturing enterprises are helpful in understanding problems that exist, and they suggest future strategies in manufacturing innovation. In this paper, based on historical data from 2000 to 2014, Bayesian methods and time-varying parameter dynamic regression models are used to identify the innovation path of manufacturing enterprises. This paper shows that the relevant research departments within firms need to improve the efficiency of research and development (R&D) institutions and mobilize the enthusiasm of full-time R&D personnel to provide a solid foundation for innovation, and transformation, and upgrading of the manufacturing industry. The paper also shows the need to improve the efficiency of R&D investment and new product R&D investments. In addition to independent R&D, manufacturing enterprises should also increase the adoption of foreign technology into their own manufacturing processes. Finally, some future strategies with regards to transformation and upgrading are discussed.

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