AbstractIn today's globalization and rapid technological development, market integration has an important impact on the competitiveness and innovation ability of enterprises. Market integration includes the integration of factor markets and goods markets, aiming to optimize resource allocation and expand market size, thus promoting economic growth and technological innovation. The purpose of this study is to explore the impact of market integration on technological innovation. Using a two‐stage least‐squares (IV‐2SLS) model and combining the data of Chinese stock market and accounting research from 2012 to 2021, it is pointed out that market integration has a significant impact on innovation ability. Research shows that the integration of factor and goods markets promotes innovation through market expansion, innovation in emerging technologies, and increased competitiveness of firms. However, there are also differences in the way that region, type of enterprise ownership, and economic sector influence market integration innovation. Factor market integration effectively promotes technological innovation by reducing government intervention and optimizing resource allocation. The results of the study provide an important reference for enterprises to make strategic decisions, especially in the face of the different effects of market integration on innovation.