Government as a non-financial participant in innovation: How standardization led by government promotes regional innovation performance in China

Abstract

Chinese provincial governments choose to become active and leading participants in standardization projects rather than opt out of them. As most extant literatures focus on the effect of standardization without government intervention, a research question then arises whether standardization with government's lead could increase the output of innovation product like patent within a region. By investigating the case of China's standardization at provincial level, this study attempts to explore the association between standardization led by government and regional innovation performance. A series of panel data analyses shows the following. (1) Increasing the supply of local standards by provincial government significantly promotes the innovation performances of the cities in this province. (2) Policy of provincial governments to disclose standard content freely also benefit the cities' innovation performances in these particular provinces. (3) The fiscal investment of city government in science and technology positively moderates the effect of provincial government's lead in local standardization on the city's innovation performance. These results suggest that besides financial sponsorship, government could also directly contribute to innovation in a non-financial way by leading standardization. Our study adds to the discussion about government's possible roles in innovation.