Chinese Industrial Firms Research Articles

Robot adoption and export performance: evidence from Chinese industrial firms

PurposeAs a new research interest, robots have surpassed human performance across several aspects. In this research, the authors wish to investigate whether robot adopters perform better than non-adopters in terms of export behavior, especially when distinguishing between different types of firms.Design/methodology/approachThe authors try a new strategy to identify the extent of robot adoption by import data and compare the export trajectories of robot adopters and non-adopters by employing the propensity score matching-difference in difference (PSM-DID) method.FindingsThe authors find that robot adopters are more likely to enter export markets and improve subsequent export performance, as the gains from doing so can spread the reduction in variable production costs to a larger customer base abroad. But this rule does not always seem to work; for large-scale firms, robot adoption makes it easier to win export competition and increase market share, while small and medium-sized enterprises (SMEs) do not seem to enjoy any benefits from adoption. More importantly, robot adoption also leads to the fiercer market competition when improving the productivity of firms, which will threaten smaller non-adopters.Originality/valueThe findings provide new evidence for the scale bias of robotics and offer new insights into whether exporters or future exporters ought to adopt robots in production.HighlightsFirst, distinguishing from existing research, we explain the controversial results of previous work on robotics by providing evidence from export markets and using the concept of size bias, which helps to update the theoretical interpretation of robotics and provides new insights for current and future exporters to evaluate their robot adoption decisions.Second, we extend previous research by further considering the potential robotics threats faced by non-adopters, especially we record that export gains of robot adopters are partially at the expense of smaller non-adopters, which provides new evidence for the rationale of SME protection policies and supplements robotics theory with new knowledge, such as the competitive game of firms related to robot adoption.Third, to our knowledge, prior research tended to examine the economic effects of robotics through industry data provided by the IFR, this may lead to systematic bias due to the inability to distinguish the robot adoption intentions of different firms. In this respect, we try a new strategy through robot import data and further distinguish between robot adopters and non-adopters in the sample, which helps to mitigate the potential bias in the findings and provide a complement to the recently developed literature related to robotics.Finally, as we pointed out earlier, robot adoption could be an interesting research work for the Chinese export market, which helps us to obtain some special findings, such as in assessing whether the benefits of robots are equally appropriate for economies that previously had an advantage in terms of labor.

Local government fiscal squeeze, environmental regulation and firms’ polluting behavior: Evidence from China

Government fiscal capability is closely related to the environmental regulation policy, but few studies have considered the effect of local government fiscal squeeze on firms' environmental decisions. Adopting a sample of Chinese industrial firms between 2002 and 2012, we implement a difference-in-differences (DD) method to examine the influence of fiscal squeeze on firms’ polluting behavior. We find that fiscal squeeze leads to more sulfur dioxide emissions from firms. This effect is only significant on large-scale firms, private firms, firms whose taxes are collected by the local taxation bureaus (LTB), and firms in heavily polluting sectors. We further investigate the potential mechanism and find that, resulting from the fiscal squeeze, local governments seek to expand their tax base by relaxing environmental regulations. The results suggest that keeping fiscal revenue stable is conducive to improving air quality.

‘Going global’ and pollution in home country: Evidence from Chinese industrial firms

AbstractThe relationship between international investment and the environment is always concerned around the world, but the literature mainly focuses on the impact of foreign direct investment (FDI) (especially from developed countries to developing countries). Currently, many developing countries have regarded outward foreign direct investment (OFDI) as a critical task of economic development and encourage firms to ‘Going global’. After OFDI, how do firms' pollution emissions change? In this study, we employ the data of Chinese industrial firms to empirically answer this question. In particular, we combine inverse probability weighted matching with a difference‐in‐difference approach to identify the causal effect of OFDI on firm‐level pollution emissions. Our result indicates that OFDI leads to the reduction in both emission intensity and emission levels. This pollution reduction is driven by improving abatement technology and decreasing energy intensity. It potentially implies that OFDI reduces pollution emissions mainly through the ‘reverse technology spillover’ effect rather than ‘pollution transfer’ effect. In addition, pollution reductions caused by OFDI are prominent for local production OFDI and resource exploitation OFDI, OFDI to high‐income countries as well as capital‐intensive industries. Overall, this study not only provides an initial evidence for the relationship between OFDI and the environment at the firm level but also provides enlightenments for international investment and sustainable development.

Which firms benefit from robot adoption? Evidence from China

This paper investigates which firms benefit from robot adoption in a developing open economy such as China. First, we construct a unique comprehensive dataset to identify robot adoption in Chinese industrial firms. Second, we adopt difference-in-differences to provide empirical analysis after conducting the common trends tests. Third, we find that adopting robots significantly increases a series of firm performance indicators in robot adoption firms. Compared with adopting firms in the labor-intensive sector, firms in the capital-intensive sector significantly benefit from robot adoption in a series of firm performance indicators, e.g., employment, capital stock, output, total factor productivity, capital returns, and exports. Finally, we check the robustness, investigate the dynamic effects, and find persistent positive effects. Our findings shed some light on the impacts of robot adoption in developing and transition countries.

Climate change, environmental regulations, and firms' efforts to reduce pollutant emissions

Environmental regulation is an important tool for achieving environmental protection. This study investigated how climate change affects firms' actions to reduce pollutant emissions through environmental regulations. We conducted a pooled OLS regression analysis using data from Chinese industrial firms that were above the designated size from 2006 to 2013. The results showed that firms reduce SO2 emissions in response to climate change, particularly when environmental regulations are more stringent. However, firms prefer to reduce productivity and implement “end-of-pipe” interventions than engage in more green innovation. Our findings highlight how firms deal with climate change under the pressure of environmental regulations and whether ecological considerations align or conflict with economic goals.

The impact of air quality on industrial intelligence: evidence from Chinese industrial firms

As Industry 4.0 develops, enterprises are investing in the industrial intelligent transformation. Using unique data from Chinese industrial enterprises, this paper investigates whether air quality affects the upgrading of industrial intelligence in enterprises. We find that decreased air quality improves industrial intelligence for enterprises, as enterprises increase their use of intelligent industrial robots when air pollution causes shortages of labour quantity and efficiency. Further analysis shows that large-scale enterprises and enterprises in areas with high economic development are more inclined to develop industrial intelligence in response to decreased air quality than their counterparts. In addition, the results indicate that the intelligent transformation of enterprises can improve their performance. This study provides a new perspective on the impact of environmental issues on corporate behaviour.

Environmental information disclosure and firm export: evidence from China

In this paper, we empirically investigate how a governmental environmental information disclosure (EID) program in China affects the extensive and intensive margins of export for a panel of Chinese industrial firms. The results show that stricter enforcement of environmental disclosure discourages firms’ participation in export. However, the export volume of remaining exporting firms increases following more environmental disclosure. The results are robust to a battery of robustness checks as well as an IV estimation. Mechanism analysis reveals that firms’ propensity of innovation increases after stricter enforcement of disclosure, lending support for the Porter hypothesis.

The effect of export tax rebate policy reform on SO2 emission intensity of firms in China

The development of trade has brought about serious pollution problems, and the impact of trade policies on firms' pollution has attracted attention. Taking the export tax rebate (ETR) policy changes of “the highly energy, highly polluting and resource consuming” (HHR) products as an exogenous shock, we examine the impact of the ETR reform on the SO2 emission intensity of Chinese industrial firms by using the time-varying DD method. The study found that the ETR policy reform of HHR products could reduce the SO2 emission intensity of firms by increasing the investment of environmental protection equipment and improving the energy utilization of technology of enterprises. The heterogeneity analysis shows that the policy has a more significantly effect on technology-intensive firms, the firms with a cleaner export product structure and the firms located in less environmentally protection force areas. The findings of this paper provide empirical evidence to support the governance of corporate pollution from the perspective of ETR policy.

Political connections and corporate carbon emission: New evidence from Chinese industrial firms

The promotion of green and sustainable development is an important global issue. We investigate the relationship between firm political connections (PCF) and carbon emissions of industrial enterprises (FCE), by employing the dynamic GMM method based on a panel dataset of Chinese industrial firms from 2008 to 2020, and exploring the mechanism involved. The results show that PCF has a promoting effect on FCE. Second, the moderating mechanism analysis demonstrates that the mitigation effect is better in the command-and-control environmental regulation (CCI) than in the market-based environmental regulation (MBI). Third, heterogeneous analysis proves that environmental pollution by state-owned enterprises with political relations (SOEs) is lower, as compared with that by non-state-owned enterprises (NSOEs); in addition, the PCF still retains an obvious function in facilitating the FCE in the Midwest region with a low degree of marketisation. Further analysis shows that PCF has an asymmetric correlation with FCE at different quantiles. This study provides a theoretical basis for using political connections to achieve carbon neutrality goals and carbon peaks, and enriches the theoretical research on the green development of enterprises.

How does the go‐with‐the‐flow export strategy affect corporate environmental performance?—Evidence from Chinese manufacturing firms

AbstractHow the export strategy affects corporate environmental performance (CEP) is an integral part of trade and environmental issue. This paper investigates the impact of the go‐with‐the‐flow export strategy on CEP during the period 2000 to 2013 by the Chinese Industrial Firms Green Production Emissions Database and the China Customs Database. The study shows that the go‐with‐the‐flow export strategy increases firms' pollution emissions, that is, the more the firms follow the market, the higher their SO2 emission intensity. However, this environmental degradation effect is only found in small and domestic‐owned firms. Furthermore, this study finds that the go‐with‐the‐flow export strategy could lead to a conservative production strategy and low survival pressure, which makes firms shortsighted in terms of less investment in clean innovation and sustainable production. Based on these empirical results, the government should reduce firms' cost of clean innovation and ameliorate the problem of market information asymmetry. Such efforts would allow firms to devote more resources to sustainable production rather than information gathering. In addition, environmental regulations should go hand in hand with the promotion of green technology to avoid the expelling effect of regulation and for firms' sustainable production.

Financial frictions, capital misallocation, and total factor productivity: evidence from China

ABSTRACT From the perspective of credit constraints and heterogeneous financing costs, this paper aims to enrich our understanding on how financial frictions affect capital misallocation and total factor productivity (TFP). Our model predicts that financial frictions could lead to greater capital misallocation and TFP losses. Moreover, credit constraints exacerbate capital misallocation and amplify TFP losses caused by heterogeneous financing costs. On this basis, we use micro-level data of the Chinese industrial firms to quantify the TFP losses caused by financial frictions. The results show that: (1) financial frictions have caused huge TFP losses in China’s manufacturing industry, and credit constraints have contributed to 120.7% of annual manufacturing TFP losses on average. (2) The manufacturing TFP losses are significantly higher in the post-crisis period than in the pre-crisis period because of the more prevalent and tighter credit constraints. (3) The increase in the post-crisis TFP losses is largely accounted for by the tightening credit constraints faced by firms in central China and non-state-owned enterprises. Our findings highlight the importance of alleviating financial frictions to improve capital allocation efficiency and promote economic growth.

OFDI and firms' sustainable productive capacity: Evidence from Chinese industrial firms

Using data on industrial firms from 1999 to 2007, this paper explores the relationship between the outward foreign direct investment (OFDI) and sustainable productive capacity of Chinese firms. The paper finds that, first, industrial firms’ engagement in OFDI has a significant impact on their sustainable productive capacity. Second, OFDI has a more pronounced effect on sustainable productive capacity for firms with developed countries as their investment destination countries, firms with single branches, and overseas trade sales-oriented firms. Finally, human capital, R&D intensity, and technology gap have significant mediating effects on the relationship between OFDI and sustainable productive capacity. Therefore, in order to better exploit the role of corporate OFDI in boosting sustainable productive capacity, China should expand its space for foreign cooperation among domestic firms, improve the talent cultivation mechanism, and capitalize on the international competitive advantages of multinational enterprises.

Environmental spillovers in international joint ventures: Evidence from Chinese industrial firms

Investing in international joint ventures (IJVs) is an important way for Chinese investors to establish partnerships with foreign investors. However, the environmental spillovers in this process have yet to be evaluated in the existing literature. Employing firm-level data with nearly 410,000 observations of Chinese industrial firms from 1999 to 2009, this paper constructs a quasi-natural experiment to analyze the effects of transitioning from being non-IJV partners to IJV partners on firm-level pollution emissions. A difference-in-differences model is used to alleviate potential endogeneity problems. Our results indicate that becoming an IJV partner reduces a firm's pollution emissions. The mechanism analysis suggests that knowledge spillovers, the increase in clean fuel usage, and the decline in pollution emission intensity could lead to a pollution reduction effect, while the expansion of industrial output could also increase pollution emissions. The heterogeneity analysis shows that the absorptive capacity of technology, ownership, the level of industrial pollution, and regional resource density influence the effect of environmental spillovers in IJVs.

Can importing improve the energy efficiency? Theory and evidence from Chinese industrial firms

Importing is an important method to connect the domestic market with international market. By importing energy resources to replace parts of domestic production, a country’s energy pressure has been alleviated to a certain extent, but does importing really improve a country’s energy efficiency? This issue is extremely important both in theory and in practice. Thus, in this paper, we first establish a micro theoretical trade model to analyze the impacts of importing on firms’ energy efficiency. Then, based on the data of China’s industrial firms, this paper systematically identifies the causal effect of firms’ importing behavior on their energy efficiency by using Propensity Score Matching-Difference (PSM-DID) in differences method. The results show that firms’ importing behavior can significantly improve their energy efficiency, and this positive effect has a certain persistence in time. At the same time, the further mechanism test shows that importing can significantly increase firms’ innovation investment and improve firms’ productivity, thus importing can improve firms’ energy efficiency through innovation investment effect and productivity effect. This paper verifies that importing can improve firms’ energy efficiency, and reveals the importance of importing on a country’s development from the perspective of energy resources and environment. This paper helps to provide relevant policy reference for the formulation and adjustment of the country’s foreign trade policy.

University–Industry Technology Transfer: Empirical Findings from Chinese Industrial Firms

The knowledge and innovation generated by researchers at universities is transferred to industries through patent licensing, leading to the commercialization of academic output. In order to investigate the development of Chinese university–industry technology transfer and whether this kind of collaboration may affect a firm’s innovation output, we collected approximately 6400 license contracts made between more than 4000 Chinese firms and 300 Chinese universities for the period between 2009 and 2014. This is the first study on Chinese university–industry knowledge transfer using a bipartite social network analysis (SNA) method, which emphasizes centrality estimates. We are able to investigate empirically how patent license transfer behavior may affect each firm’s innovative output by allocating a centrality score to each firm in the university–firm technology transfer network. We elucidate the academic–industry knowledge by visualizing flow patterns for different regions with the SNA tool, Gephi. We find that innovation capabilities, R&D resources, and technology transfer performance all vary across China, and that patent licensing networks present clear small-world phenomena. We also highlight the Bipartite Graph Reinforcement Model (BGRM) and BiRank centrality in the bipartite network. Our empirical results reveal that firms with high BGRM and BiRank centrality scores, long history, and fewer employees have greater innovative output.

Economic growth target management and the quality of economic development: evidences from China

ABSTRACT By analyzing the data of Chinese industrial firms, we explore the association between governments’ economic growth target management behaviour and the quality of local economic development. We find that the rise of economic growth pressure can decrease the total factor productivity (TFP) of local enterprises and has a negative impact on the quality of local economic development. Besides, the effect of economic growth pressure on local firms’ productivity is more pronounced when firm is stated owned, when firm is located in cities with newly appointed officials, during the period of Communist Party of China National Congress (CPCNC), but would be attenuated if municipal party secretary has achieved a Ph.D. degree. Further mechanism analysis verifies that higher economic growth pressure could demolish the TFP of enterprises by distorting marginal revenue productivity of capital ().

Air pollution and corporate innovation: incentive or resistance? Evidence from regression discontinuity.

The potentially serious economic consequences of China's severe air pollution problem cannot be overlooked, especially the impact on corporate innovation, which is a core driver guiding firms towards efficient and high-quality development. However, the existing literature has more often investigated the effect of pollution on corporate innovation from the perspective of environmental regulation, while relatively little research is available directly from the perspective of air pollution. In this study, for better causal identification and endogeneity treatment, we consider the Qin ling Mountains-Huai River heating policy as a quasi-natural experiment and explore for the first time the causal effect of air pollution on Chinese industrial firms' innovation through a geographical regression discontinuity (RD) approach. The results find that air pollution has a significant inhibitory effect on the industrial firms' innovation, especially for green innovation, where the innovation of state-owned enterprises, high pollution, and low monopoly firms are more sensitive to pollution. Specifically, a 1% increase in PM2.5 emissions leads to a 0.803% reduction in the corporate total innovation, a 0.924% reduction in invention patents, a 0.574% reduction in utility model patents, and a 1.087% reduction in design patents. We have verified the robustness of this core finding through a series of robustness checks including adjustment bandwidth, IV estimation, and placebo test. Further to this, we find that air pollution may negatively affect corporate innovation through three channels: crowding out R&D investment, reducing total factor productivity (TFP), and reducing labor supply and the proportion of highly skilled employees. This study sheds light on the severe losses caused by air pollution on corporate innovation capabilities at the micro-level, deepening the understanding of the economic harm caused by air pollution. This suggests that as firms strive to improve their innovative capacity and competitiveness, they should also be aware of environmental protection and green development; otherwise, unnecessary losses in innovation dynamics will be incurred.

The effect of state capital injection on private firms’ performance: Evidence from Chinese industrial firms

Based on Chinese industrial firms’ data, this study found that state capital injection weakened the technological progress and management efficiency of private firms, which led to a reduction in enterprises’ total factor productivity. State capital injection also increased the labor cost and investment in fixed assets, and lowered the profitability of firms. Furthermore, the state capital did not have a significant negative impact on firms in technology-intensive and monopoly industries. This study has shed some lights on the reform of the state-owned assets management system and the development of a mixed ownership economy.

Does environmental regulation affect the export competitiveness of Chinese firms?

Strict environmental governance urges firms to implement higher sustainable production requirements and environmental standards for export products, making it challenging for firms to maintain export competitiveness. This study constructs firm-product level markups as the measure of export competitiveness using microdata of millions of observations from Chinese industrial firms. It then empirically investigates the impact of environmental regulations on those firms' export competitiveness. The empirical study finds: 1) environmental regulations have significantly increased the markups of Chinese firms' export products, indicating that firms' export competitiveness is enhanced, verifying the validity of the Porter Hypothesis. 2) Environmental regulations have a greater effect on increasing the markups of non-core products than that of core products. 3) Environmental regulations have significantly increased the markups for private-owned firms, foreign-invested firms, and firms in the eastern region, but not for state-owned and non-eastern firms. 4) Environmental regulation mainly enhances firms' export competitiveness mainly through the TFP channel. Moreover, a series of robustness tests support the empirical results. This research recognizes the positive achievements and benefits of China's environmental governance. It recommends that the Chinese government strengthen the supervision of state-owned enterprises and help enterprises in economically underdeveloped areas overcome the challenges brought by environmental regulation.

Quality of imported intermediates, innovation behaviour and markups: Firm‐level evidence from China

AbstractThis paper examines whether higher quality imported intermediates can increase firms' markups. Based on the conceptual model, we first find that improving the quality of imported intermediates affects firms' decision‐making in terms of innovation and firm‐level markups through the price channel and the cost channel. We combine the annual survey data of Chinese industrial firms (ASIF), Chinese customs transactions and patent data to verify the theoretical propositions. The results report that: (1) there is a significantly positive correlation between the quality of imported intermediates and firms' markups; (2) innovation acts as a potential channel through which the quality of imported intermediates increases firms' markups; (3) by decomposing markups into the price channel and the cost channel, we find that the quality of imported intermediates affects firms' markups through the cost channel. Our results suggest that higher quality imported intermediates may improve firms' market power through innovation.