Corporate Innovation Investment Research Articles

Intellectual property protection, infringement disputes, and, corporate innovation investment persistence

AbstractTo examine the important role of regional intellectual property (IP) protection, we empirically check the impact of infringement disputes on corporate innovation investment persistence. We document that IP protection enforcement can significantly and negatively mitigate the infringer's innovation investment persistence but positively enhance that of the infringed firm. This effect is more pronounced for non‐high‐tech or non‐state‐owned firms. Moreover, IP protection mainly reshapes a firm's perceptions of innovation investment persistence through the efficiency and fairness of law enforcement. Our findings provide insights into optimizing the IP protection environment, especially for emerging economies.

Internationalization of family business and innovation investment: An executive incentive-based perspective

We selected a sample of listed family business in China from 2017 to 2022 to explore the relationship between the internationalized operations of family businesses and corporate innovation investment. It is found that the internationalized operation of family businesses has a positive impact on innovation investment; executive compensation incentives and executive equity incentives positively regulate the impact of the internationalized operation on innovation investment of family businesses.

Does tax symmetry improve corporate innovation investment? Evidence from the change policy of loss carrying forward period in China

Taking China's A-share listed companies with high-tech enterprise qualification from 2015 to 2020 as a sample, we find that the increase of tax symmetry can significantly improve enterprise innovation investment; agency conflict has a significant negative regulatory effect. Further, this paper empirically tests the role path of tax symmetry on enterprise innovation investment. The results show that tax symmetry mainly promotes the level of enterprise innovation investment by improving the level of enterprise risk-taking, which supports the government's "sleeping partner" hypothesis. Therefore, it is suggested that the government should enhance tax symmetry and act as a "sleeping partner" of enterprises, which has important enlightenment significance for stimulating enterprises to increase their enthusiasm for innovation. Under the background of China's emerging economy, this study will contribute to the references of tax policies and enterprise innovation.

How does climate risk affect corporate innovation? Evidence from China

AbstractThis paper investigates the effects of climate risk on corporate innovation in China. Employing a city‐level climate risk indicator that we constructed and a sample of 21,430 firm‐year observations of Chinese‐listed companies, we find that climate risk is negatively associated with corporate innovation investment and outcome. These results are robust to alternative empirical designs and identifications. Our mechanism analyses reveal that climate risk impedes corporate innovation by motivating firms to increase cash holdings as financial reserves. Additional analyses suggest that the adverse impact of climate risk on corporate innovation is more pronounced for high‐tech firms, and less salient for firms with higher financial constraints and female Chairperson or CEO. Furthermore, the decrease in corporate innovation due to climate risk can lead to a reduction in firm value. These findings contribute to the existing literature on climate risk and corporate innovation and inform regulators and listed firms concerning climate risk.

Equity incentive characteristics, industry life cycle and corporate innovation

Taking the industry life cycle as a perspective, this paper selects A-share listed companies in Shanghai and Shenzhen from 2016 to 2022 as a sample to explore the impact of listed companies' equity incentive characteristics on the level of corporate innovation. It is found that: incentive characteristics have a significant impact on corporate innovation investment, and stock options promote R&D investment more obviously than restricted stocks; stock options promote corporate innovation investment level only in growing and mature industries; in the mature period of the industry, equity incentives of growing companies have a positive role in promoting innovation investment.

The Response of Corporate Innovation to Climate Policy Uncertainty: Evidence from China

As the climate change risks’ effects on social development increase, how to deal with these challenges has become extremely urgent, and it is necessary for companies to adapt to the changing circumstances. This paper estimates the impact of climate policy uncertainty on corporate innovation using unbalanced panel data with 2,449 listed companies from 2009 to 2020. The findings show a significant positive correlation between climate policy uncertainty and corporate innovation investment. Specially, two possible mechanisms are explored. Government environmental regulations force companies to produce cleanly. Optimistic market expectations encourage firms to shift to a green development model. Further, the renewable energy industry and state-owned enterprises’ powers of innovation are more robust. Jointly, our findings offer the government a clear direction for policy making by identifying the effects of climate policy uncertainty on corporate innovation.

Bank credit and corporate innovation investment: The role of government risk sharing

AbstractThis paper builds a difference‐in‐difference model (DID) to study the impact of government risk sharing policies on corporate innovation investment. High‐tech firms are used as the experimental group to test the effect of policy shocks. It is shown that government risk sharing may ease financing constrains, which will increase corporate innovation investment. The results suggest that the effect of government risk‐sharing policies on bank credit is short‐run, while the effect on corporate innovation investment is more sustainable. In addition, the government risk‐sharing ratio is inversely proportional to the loan rates and the success rate of innovation.

Implications of corporate innovation investment on environment sustainability with moderating role of managerial stock incentives: A case of the oil and gas sector of the United States of America

This study examines the impact of corporate innovation investment on environmental sustainability in oil and gas companies in the United States of America. We have compiled the empirical data set of 90 major and renowned companies from 2009 to 2019. To examine the cause-and-effect relationship between the specific factors, we applied the generalized method of movement, and the statistical result reflected a significant and positive relationship between corporate innovation investment and environmental sustainability. This indicates that the positive inclusion of intangible assets leads to motivation in innovation that enhances the context of environmental sustainability. Managerial stock incentives significantly and positively moderate the relationship between corporate innovation investment and environmental sustainability. Enterprises should not only consider their management stock mechanism during the formulation of an innovation strategy but also design the contract according to the innovation level of the enterprise to determine the level of managerial incentives. This study provides insight regarding the significant role of corporate innovation, which establishes a way forward to environmental sustainability.

How Does Philanthropy Influence Innovation Management Systems? A Moderated Mediation Model with a Social Exchange Perspective

Social philanthropy and innovation systems both require significant resource investment—how can organizations achieve both? This paper combines social exchange theory, signaling theory and imprinting theory to analyze the intrinsic dynamics mechanism from the perspective of government technology resource acquisition and to explore the influential role of generalist CEOs. Based on the hand-collected multidimensional career experience dataset of CEOs and the quantitative analysis of 3651 enterprises in China’s A-share listed manufacturing industry from 2010–2019, the results show that: philanthropic donation has a systematic contribution to corporate innovation investment, in which government science and technology (S&T) resource acquisition plays a partially mediating role; generalist CEOs significantly enhance the effect of philanthropic donations and government S&T resource acquisition on innovation investment. Finally, the statistical results remain stable in the lagged effects experiment and the IV-2SLS model analysis using exogenous variables. The contribution of this study lies in expanding the research on maximizing the combined benefits of economic value creation and social performance from a social exchange perspective, and helping us understand why the share of generalists in the global managerial market big data has been steadily increasing.

Public governance and corporate innovation: evidence from a quasi-natural event in China

ABSTRACT Using a unique quasi-natural event, i.e. gangdom and evil forces (hereafter, GEs) elimination in China, we investigate the relationship between the public governance proxied by GEs elimination and corporate innovation based on the data of Chinese listed firms from 2013 to 2021. The results show that the GEs elimination leads to a 0.39% increase in corporate innovation investment. Quantitatively, the increase is approximately equivalent to 4.42 million yuan for a firm of median innovation investment. Furthermore, we find that the GEs elimination increases corporate innovation through two possible channels: relieving financing constraints and intensifying market competition. In addition, we also reveal that the effects of GEs elimination on corporate innovation are stronger in firms located in a better marketization environment and a stronger Intellectual Property Rights (IPR) protection environment. Our main results pass a series of robustness tests and endogeneity issues.

Digitalization, competition strategy and corporate innovation: Evidence from Chinese manufacturing listed companies

Digital transformation is permeating from the service sector to the manufacturing industry and is becoming an increasingly important factor in enterprise operating decisions. Based on data from A-share listed Chinese manufacturing companies, this study examines the nexus between the digitalization of the manufacturing industry and corporate innovation investment. Empirical evidence indicates that manufacturing enterprises have significantly increased their investment in innovation activities in the process of digital transformation, and this conclusion is still valid after employing a series of robust analyses to overcome endogeneity. Digital transformation also has an indirect effect on manufacturing enterprises' market competition strategy. Manufacturing digitalization significantly promotes enterprises to implement differentiated competitive strategies, while inhibiting the implementation of a cost-competitive strategy. Manufacturing enterprises with higher viability are more adaptable to digital transformation and tend to implement differentiated competitive strategies. Hence, the innovation incentive effect is greater for high-viability enterprises, regardless of the scale of operation, the ownership, or productivity. These findings provide useful policy implications for promoting the integration of digital transformation and innovative development in the manufacturing industry.

CEO organizational identification and corporate innovation investment

AbstractIdentity theory in economics reveals that organisational identification motivates managers to take actions that are strongly aligned with firm interests. Nevertheless, organisational identification may also play a role in personal incentives. Leveraging the availability of CEO organisational identification data from the national internal control survey of listed firms in China, we document a positive impact of CEO organisational identification on corporate innovation. We also find that the positive impact is more pronounced for firms whose CEOs own shares, that are followed by more financial analysts, and that have higher institutional ownership. Additional analyses suggest that the interaction between CEO organisational identification and corporate innovation investment significantly enhances firm value. Overall, our study shows that CEO organisational identification is a non‐trivial driver of firm innovation and growth.

Preferential Interest Rate, Financing Constraints and Enterprise Innovation Capability

This paper takes my country's Shanghai and Shenzhen A-share non-financial listed companies as the research object, selects their data from 2016 to 2020, and discusses the impact of preferential interest rates and financing constraints on corporate innovation capabilities. Empirical analysis finds that most enterprises generally have financing constraints, and financing constraints will inhibit the improvement of corporate innovation capabilities; and preferential interest rates can alleviate the financing constraints in corporate innovation investment through direct channels and indirect channels. Therefore, this paper puts forward suggestions from the aspects of implementing differentiated policies, combining "before" and "after", reducing information asymmetry, and establishing and improving the effect evaluation mechanism, hoping to alleviate the financing constraints of Chinese enterprises and improve their innovation capabilities useful reference.

How does fiscal policy uncertainty affect corporate innovation investment? Evidence from China's new energy industry

This study investigates Chinese A-share listed companies in the new energy industry for the period 2007–2019. We shed new light on the nexus between fiscal policy uncertainty and corporate innovation investment. The main empirical findings are threefold. First, fiscal policy uncertainty significantly reduces new energy enterprises' innovation investment, and the adverse effect is mainly due to the decline in the incentive effect of government support on innovation investment. Second, product market competition reduces the adverse effect of fiscal policy uncertainty on innovation investment, which indicates that the strategic growth option theory holds to a certain extent. Third, bank credit constraint is the mechanism by which fiscal policy uncertainty restrains innovation investment. Overall, although there may be differences in the influence mechanism of fiscal policy uncertainty on innovation, the empirical evidence generally does not support the viewpoint of ownership differences. The conclusions continue to hold after controlling for endogeneity and conducting a series of robustness tests.

Employee Stock Ownership Plans for Tobacco Concept Stock Listed Companies and Corporate Innovation Investment

In this study, we discussed the influence of employee stock ownership plan (ESOP) on innovation investment in Chinese tobacco concept stock listed companies. Methods: we firstly performed empirical research method to investigate the differences in innovation investment between companies implementing ESOPs and companies not implementing ESOPs by using the panel data of tobacco concept stock listed companies from 2014 to 2020. Secondly, we further performed case study method to test the changes in innovation investment of tobacco concept stock listed companies before and after implementing ESOPs by choosing Hengfeng Paper as a research subject. Results: In tobacco concept stock listed companies, companies implementing ESOPs had higher level of innovation investment than companies not implementing ESOPs. After implementing the ESOP, Hengfeng Paper significantly increased its investment in innovation. Conclusion: In tobacco concept stock listed companies, the implementation of ESOP with ordinary employees as the main incentive object helps to promote innovation investment.

A Study on the Relationship between the Second-generation Involvement Time and Family Business Innovation Investment

This paper takes the listed family firms in China’s manufacturing industry from 2008 to 2017 as the sample, and uses a multiple regression method to study the impact of the second-generation involvement on the innovation investment of family firms. Based on the social emotional wealth theory and the perspective of legitimacy, and after considering the effect of the second-generation’s multiple goal orientation over time, this paper finds that: (1) Compared to the second-generation that has been involved for a long time, the second-generation that has been involved in the early stage is more inclined to improve the innovation input of family firms, that is, as the time of the second-generation involvement increases, the level of family business innovation investment will decrease. (2) The second-generation’s work experience outside the firm promotes family business innovation investment, that is, the outside work experience weakens the negative relationship between the second-generation involvement time and corporate innovation input. (3) The involvement of family members in TMT hinders family business innovation input, so the involvement of family members in TMT enhances the relationship between the second-generation involvement time and corporate innovation input. (4) The performance gap plays a certain role in the above-mentioned relationship. The performance gap limits the autonomy of the second-generation. Family firms will prefer risk aversion when facing the performance gap, which weakens the positive impact of the second-generation work experience on corporate innovation investment, and enhances the negative impact of the involvement level of TMT family members on corporate innovation investment. By considering the time effect of the second-generation involvement, this paper integrates the dynamic choice preferences of the second-generation goal paradox, and reconciles the inconsistent conclusions about the impact of the second-generation involvement on corporate innovation investment in previous studies. This paper also supplements the study of the second-generation individual-level goal paradox of family business, integrates the dynamic variability of the second-generation goal over time, and explains from a new perspective why the level of corporate innovation input will vary. The changes in the second-generation involvement time further enrich the successor decision-making research in the context of succession. This research provides ideas for succession training and planning for the succession period, helps to further understand the second-generation goals and decision-making preferences, and also provides enlightenment for external investors to predict family business behavior during the succession period.

Analysis of the Impact of Fiscal Policy on the Innovation Performance of New Energy Vehicle Companies-An Empirical Analysis Based on Panel Data of Listed Companies

Based on the panel data of listed companies in China’s new energy automobile industry from 2015 to 2019, an empirical test of the impact of government direct and indirect subsidies on corporate innovation performance is studied, and the mediating role of corporate innovation input is studied. The research results show that direct government subsidies have a positive impact on the innovation performance and investment of enterprises, and indirect government subsidies have a positive impact on the innovation performance and investment of enterprises. At the same time, corporate innovation investment plays an intermediary role in government subsidies and innovation performance. On the basis of the above conclusions, it provides a reference for the government to evaluate the effect of subsidies and adjust subsidy policies.

Corporate Governance vs. Financial Performance for Intensity of Innovation Investments

In a rapidly changing technology world, companies need to conform to their customers’ expectations if they wish to remain competitive in the marketplace. New products, services, processes, marketing, management, and organizational innovation can all be tools to keep companies competitive. Research and development (R&D) expenditure is a critical component in the development of a design process. According to the scientific literature, corporate governance and financial performance can be essential variables with a significant impact on the innovation process. By acting transparently and honestly with all stakeholders (employees, suppliers, customers, creditors, government, community), companies can ensure and enhance the economic sustainability of the whole country through efficient management of financial resources and work toward high value-added innovation. Therefore, the aim of this work was to analyze whether corporate governance and financial performance affect the development of corporate innovation investments and, at the same time, the sustainability of the country’s economy. Additionally, this research proposes a methodology for integrated assessment of corporate innovation investments in the context of economic sustainability, aimed at companies and countries for more efficient investment in innovation and sustainable development outcomes. The object of the research was corporate innovation investment intensity as the driver for economic sustainability. An evaluation methodology for integrated assessment of corporate innovation investment can be used as an instrument for the stimulation of business innovation and strategic development of a country’s economy. The evaluation methodology of integrated assessment of corporate innovation investments can be utilized to evaluate different companies and governments. Evidence-based empirical calculations show that synchronized corporate governance and financial performance influence the intensity of corporate innovation investments in the context of economic sustainability.

Economic policy uncertainty exposure and corporate innovation investment: Evidence from China

This study investigates the impact of firms' heterogeneous exposure to economic policy uncertainty (EPU exposure) on corporate innovation investment. The results show that, first, a significant negative relationship exists between EPU exposure and corporate innovation investment, and this result continues to hold after controlling for endogeneity and conducting a series of robustness tests. Second, operational risk and financial distress are the main channels through which EPU exposure affects innovation investment. Third, firm-specific factors, such as government ownership, government subsidies, profitability, R&D personnel level, and sufficiency of net working capital, shape the relationship between EPU exposure and innovation investment. This study contributes new evidence on the impact of EPU exposure on firm behavior in China, where ongoing economic and financial reforms introduce sources of significant uncertainty.

Institutional Investor, Economic Policy Uncertainty, and Innovation Investment: Evidence from China

As a participator in corporate investment decision-making, the institutional investor is directly related to the corporate innovation investment. However, the economic policy uncertainty is aggravated by problems, such as economic slump and trade friction. Thus, institutional investors are not optimistic about the prospects of innovation investment. To explore the influence of institutional investors on corporate innovation investment from the perspective of economic policy uncertainty, using the 2010–2018 panel data in China and the fixed effect model, the influences of institutional investors on innovation investment and the moderating effects of the economic policy uncertainty were analyzed. Results show that institutional investors facilitate corporate innovation investment. Moreover, the increasing economic policy uncertainties repress the promoting effect of institutional investors on innovation investment. Furthermore, the institutional investors boost the corporate innovation investment by improving the internal control and relieving the financing constraints. For private companies, new and high-tech companies, the promoting effect of institutional investors on the corporate innovation investment is inhibited by the economic policy uncertainty to a small extent. For the listed companies located in areas with a high level of investor protection and intellectual property protection, the economic policy uncertainty has a minimal influence on the institutional investors and corporate innovation investment. The conclusions obtained from this study provide empirical evidence for giving full play to the role played by institutional investors in corporate innovative development. The conclusions also reveal, from the macroscopic level, that the consistency and stability of governmental economic policies have important effects on corporate development.