China’s distinctive civil–military integration policy and firm innovation

Abstract

Abstract Despite the widespread implementation of civil–military integration (CMI) policies in various countries, there remains a significant debate surrounding their impact on innovation. Taking the set of the National Civil–Military Integration Strategy in China in 2015 as a quasi-natural experiment, this paper uses the Propensity Score Matching and Difference in Difference (PSM-DID) method to systematically examine the impact of CMI policy on firm innovation. The results demonstrate that the CMI policy has notably increased the intensity of firms’ Research and Development (R&D) investment, but does not exert a significant influence on their innovation output and efficiency. Notably, the policy effect is primarily observed among incumbent military firms and large-scale firms. Moreover, the CMI policy exhibits a considerable effect on fostering new cooperation links, but does not yield a significant impact on deepening cooperation or promoting network agglomeration. The results imply that the policy has not yet deeply affected firms’ innovation processes and patterns. These findings provide manifold implications for policy understanding and decision-making.