The Impact of Financing Constraints and Uncertainty on Manufacturing Innovation Efficiency: An Empirical Analysis from Chinese Listed Firms

Abstract

Chinese listed manufacturing companies face more serious financing constraints. Considering financing constraints and uncertainties, an accurate assessment of the innovation efficiency of China’s listed manufacturing industry can provide decision support for China to become an innovation nation. We construct a heterogeneous stochastic frontier model to analyze the overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency of the Chinese manufacturing industry, using Chinese A-share listed manufacturing companies as a research sample from 2011–2019. The research results show that (1) Financing constraints make enterprises deviate from innovation efficiency, and internal financing significantly reduces enterprise financing constraints and does not bring uncertainty to subsequent financing, commercial credit, and external financing; although it can alleviate enterprise financing constraints, it will increase the uncertainty of subsequent financing constraints and the enterprise size.. (2) Internal financing, commercial credit financing, external financing, and firm size can effectively alleviate the financing constraint for firms to carry out quality innovation activities of invention patents and quantitative innovation activities of utility patents; internal financing, external financing, and firm size can effectively alleviate the financing constraint for quantitative innovation activities of design patents, while commercial credit financing has no significant effect. (3) The influence of factors such as financing constraints makes the real innovation efficiency of China’s listed manufacturing industry only about 20%, and enterprises face more serious financing constraints. (4) The heterogeneity results found that the overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency in the eastern region are the highest, and the innovation efficiency level is higher than the national average, followed by the central and western regions. The overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency of the central region are higher than the national average, but the innovation quality efficiency and innovation quantity efficiency of the western region are lower than the national average; the overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency of large-scale enterprises are the highest and even higher than the average value of the whole sample, while the innovation efficiency of medium and small-scale enterprises are lower than the average value of the whole sample.