The digital technology revolution has enabled innovators to cross industry boundaries and enter traditional industries, posing a threat to traditional enterprises. The dynamic interaction of competition and cooperation between traditional manufacturing enterprises and digital innovation entrants were explored, and the mechanism of the mesmeric effect that incumbent cross industry mergers was revealed and acquisitions could improve enterprise performance. The new ideas for the transformation and upgrading of traditional manufacturing enterprises were provided, and the relevant theories of “cross-border alliances” were improved. At the same time, theoretical guidance for incumbent learning to adopt digital innovation technologies are provided and digital innovation is integrated to promote high-quality development.