Abstract
ABSTRACT This paper examines the potential impact of the Industry Association Reform, aiming to decouple industry associations from administrative authorities, on enterprise innovation in China. To achieve this, we employ the difference-in-differences methodology, drawing on data sourced from the pharmaceutical industry. Our findings suggest that the reform has effectively enhanced enterprise innovation. Three critical mechanisms that underpin this positive effect are information sharing, knowledge spreading, and rent-seeking reduction. Furthermore, this enhancement in innovation is particularly conspicuous in enterprises with better R&D investment, executive incentives or decision-making system, and in more developed cities and among council members of industry associations.
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