1. Affixing a mission label to an organisation is institutionally cheap. Reconstructing the incentive architecture that actually governs its behaviour is an altogether different order of institutio...

This study examines whether state capital refocusing promotes innovation-driven development by reshaping the scale and technological direction of innovation in state-owned enterprises (SOEs). Using 499 firm-year observations for 42 Beijing municipal SOEs from 2013 to 2024, we distinguish innovation output from innovation allocation across invention-oriented, green, and internationally oriented patents. Two-way fixed-effects estimates show that a one-standard-deviation increase in core business focus is associated with increases of 0.610, 0.468, 0.383, and 0.090 log points in overall, invention-oriented, green, and internationally oriented innovation output, respectively. Refocusing also raises the shares of invention-oriented and green innovation, while leaving the international share unchanged. The main patterns remain broadly robust to alternative measures, additional controls, alternative specifications, and a continuous-treatment difference-in-differences design based on the 2020–2022 SOE Reform Three-Year Action Plan. Mechanism analyses provide evidence consistent with industrial-chain control as an important transmission channel, while heterogeneity analyses show that functional missions, industrial-chain positions, and strategic-sector status condition the effects. The findings indicate that state capital refocusing influences not only how much SOEs innovate, but also where innovation resources are directed, providing firm-level evidence on how public-capital reallocation can support mission-oriented innovation.