The development of a unified national market is a key strategic priority for China’s economic growth. As third-party organizations providing quality and safety assurance services within the socialist market economy, inspection, testing, and certification (ITC) bodies play a crucial role in the development of a unified national market. However, contrary to the principle of full competition emphasized by the unified national market, “involutionary” competition among enterprises has become a prevalent competitive trend across all sectors of society. Therefore, exploring whether market-oriented reforms in the ITC sector can alleviate this “involutionary” competition holds practical significance for advancing the development of a unified national market. Using A-share listed companies on Chinese Shanghai and Shenzhen stock exchanges from 2014 to 2024 as the research sample, this paper examines the impact of market-oriented reforms in ITC bodies on firms’ “involutionary” competition. The findings reveal that such reforms mitigate firms’ “involutionary” competition. Mechanism tests reveal that market-oriented reforms of ITC bodies alleviate “involutionary” competition among enterprises by promoting diversified business operations, enhancing senior executives’ awareness of innovation, and reducing information asymmetry. Heterogeneity analysis shows that the mitigating effect of the reforms is more pronounced in regions with relatively well-developed social security systems, stronger industrial chain resilience, and among high-tech enterprises. Further research demonstrates that the market-oriented reform of ITC bodies can not only alleviate firms’ “involutionary” competition but also promote the development of new quality productive forces. Compared with previous studies, this paper expands the scope of research in the following two aspects. First, existing studies on the economic consequences of market-oriented reforms in the ITC sector have mostly focused on specific ITC bodies or those within a particular industry, examining the role of market attributes in these contexts. In contrast, this study examines ITC bodies established under first- and second-level administrative divisions in China. On this basis, it further investigates the impact of market-oriented reforms of ITC bodies on the “involutionary” competition of enterprises affiliated with the same market supervision and administration bureau, thereby extending the research on the economic consequences of market-oriented reforms in the ITC sector. Second, this study draws on existing methods for measuring firms’ “involutionary” competition. On this basis, it employs the entropy weight method to construct a comprehensive index of “involutionary” competition. Based on this index, it empirically examines the impact of market-oriented reforms in ITC bodies on firms’ “involutionary” competition. On a practical level, the findings of this study reveal the development direction of market-oriented reforms in ITC bodies and provide policy insights for effectively addressing firms’ “involutionary” competition and advancing the development of a unified national market.