Abstract: Cross border innovation has become an effective way for enterprises to gain competitive advantages and achieve sustainable development. However, due to limitations such as resources, capabilities, and experience, small and medium-sized manufacturing enterprises lack understanding of the laws of cross-border innovation and fall into cross-border difficulties. Although there have been studies indicating the direction and motivation of cross-border innovation, the innovation mechanisms and paths have not been clearly defined, making it difficult to provide specific theoretical guidance, and there is still a lack of relevant research on small and medium-sized manufacturing enterprises. Therefore, it is urgent to explore the mechanism and path for small and medium-sized manufacturing enterprises to achieve long-term sustainable development through cross-border innovation. Based on the theory of complex adaptive systems, single case study method was adopted to explore the implementation mechanism and path of cross-border innovation in small and medium-sized manufacturing enterprises, with Shangpinzhaipei as the research object. The research found that: (1)"Stimulus→behavior→result" is the internal mechanism for enterprises to achieve cross-border innovation in a dynamic environment. In the face of environmental stimulation, enterprises form cross-border motivation under the guidance of strategic orientation by detecting and scanning external environmental pressure and market demand, combining with internal resource base and other information, and then adjust their own strategic orientation, which promote the reconfiguration of enterprise capabilities through continuous interaction with the environment;(2) In the process of cross-border innovation, the strategic orientation of enterprises evolves with the upgrading of cross-border driving forces, presenting a transformation from "entrepreneurial orientation→market orientation→technology orientation", and driving the continuous expansion of enterprise boundaries, the shift of focus on knowledge and resource acquisition, and the transformation of enterprises from improving and enhancing existing capabilities to replacing and transforming new capabilities, achieving an evolutionary process of "capability evolution→capability transformation→capability substitution"; (3) With the evolution of capacity reconfiguration, cross-border innovation of small and medium-sized manufacturing enterprises exhibits an iterative evolution process of "goals from inside to outside, scope from small to large, and depth from shallow to deep". Specifically, with the increasing complexity and adaptability, the cross-border goals of enterprises have gradually upgraded from promoting business growth to meeting consumer needs and reconstructing competitive advantages. The scope and depth of cross-border operations have evolved from simply entering cross industries to extending and innovating the value chain, and then building a digital industrial ecosystem to achieve value co-creation and sharing. The research conclusion provides theoretical support and practical reference for the cross-border innovation practice of small and medium-sized manufacturing enterprises. Specifically, it can help small and medium-sized manufacturing enterprises to understand cross-border motivation, and drive cross-border innovation by adjusting strategic orientation, reconfiguiring capabilities and organizational structure. At the same time, the research conclusions can also guide small and medium-sized manufacturing enterprises to identify cross-border innovation types according to the development stage of enterprises. The above conclusions are helpful for enterprises to dynamically adapt to environmental changes, gradually realize higher-level cross-border innovation, and then achieve long-term sustainable development.