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The study discusses after China and Taiwan has finally cleared all the hurdles to gaining World Trade Organization (WTO) membership, joining in November 2001. However, foreign investors in China are increasingly embroiled in disputes with Chinese companies due to innovation barriers. Besides, after China and Taiwan joint WTO, high tech industrial competition faces globalization and digitalization two big problems Therefore, this paper examines the notion that China’s and Taiwan’s entry into the WTO and their innovation reforms in line with globalization and digitalization have a significant impact on the entire system of knowledge-based innovation management.

Firstly, the study reviews innovation through a knowledge-based theory lens in the innovation supporting processes to construct a research framework. Internally, the supporting innovation processes include knowledge and technology innovation, Managing & organizing innovation. Externally, the supporting innovation processes include inter-organization networks, innovation networks and eknowledge networks and cooperation innovation.

Secondly, the study through case studies critically investigates the supporting processes of innovation management in China and Taiwan in the context of their WTO entry, and puts forward exploratory ideas that may assist in creating a blueprint for deepening China’s and Taiwan’s innovation reforms. Under knowledge based and digital economy, how to overcome barriers of knowledge based innovation over the cross-strait and global markets are the most key factors for firm’s survival. To answer these questions, in this paper, a more complete integrated innovation model and knowledge based innovation supply chain (KISC) for exploring and determining innovative supporting process in high tech industries and applying to cross strait (China and Taiwan) marketplace is presented. The results of the study will benefit not only the construction of knowledge based innovation framework, but also the business model transformation of competitive advantage.