Collaboration, product innovation, and sales: an empirical study of Chinese firms

Abstract

Purpose – The purpose of this paper is to examine the role that collaborations, both foreign and domestic, play on product innovation, sales mix, and sales revenue for Chinese firms. Both statistical correlations and marginal (economic) effects of collaborations feature in the analysis. Design/methodology/approach – This study includes 2,700 Chinese firms across 15 industry sectors and 25 cities from a World Bank survey conducted in 2012; the data are stratified by firm size. Given the different types of dependent variables to be estimated, several methodologies are employed: logistic regression, Poisson regression, and ordinary least squares. The marginal effects of key variables are then calculated to demonstrate their economic impact. Findings – Regarding the likelihood of product innovation, collaboration with domestic (Chinese) companies is significant for Chinese micro, medium, and large enterprises. Being a foreign subsidiary is significant for the proportion of new products in the sales mix for small, medium, and large firms. Domestic collaboration can boost the sales of innovating small firms and innovating medium companies by nearly 113 and 140 percent, respectively. Originality/value – This study builds on the current literature by examining the impact of foreign vs domestic collaboration on Chinese firms, whereas most research examines foreign players only. It offers a more nuanced analysis by stratifying estimates according to firm size, and it goes beyond statistical significance to quantify the real economic effect of collaborations on Chinese companies.