Corporate Innovation Activities Research Articles

Storm clouds over innovation: Typhoon shocks and corporate R&D activities

This study investigates the economic impact of typhoon disasters on corporate innovation activities, a critical driver of economic growth and resilience. Utilizing a comprehensive dataset of Chinese public companies from 2010 to 2022 and employing a wind field model to construct a city-level typhoon destruction index, we apply difference-in-differences and instrumental variable methods to analyze the effects on corporate innovation. Our findings reveal that typhoon disasters significantly reduce both patent filings and R&D investment intensity, particularly in coastal areas and technology-intensive industries. The adverse effects are transmitted through financial constraints, human capital loss, and infrastructure damage. This research contributes to understanding the microeconomic implications of extreme weather events on innovation-driven economic growth, offering insights for disaster resilience policies in vulnerable regions.

Impact of Fiscal Policy on Corporate Innovation in an Emerging Market Economy: Evidence from Brazil

This study investigates the impact of fiscal policy on corporate innovation in an emerging market economy, focusing on Brazil. Utilizing a comprehensive dataset of firms listed on the B3 Brazilian Stock Exchange from 2010 to 2020, we employ panel data analysis and the difference-in-differences (DiD) method to examine the effects of tax incentives, government subsidies, and public investment in innovation infrastructure on corporate innovation activities. Our findings reveal that tax incentives significantly enhance innovation outputs by reducing the financial burden of R&D investments. Similarly, government subsidies are shown to lower the cost and risk associated with R&D projects, thereby fostering greater innovation. Furthermore, public investment in innovation infrastructure plays a crucial role in creating an enabling environment for corporate innovation. These results provide robust evidence supporting the effectiveness of fiscal policy in promoting innovation in emerging markets, offering valuable insights for policymakers aiming to foster sustainable economic growth and competitiveness.

Effect of top management team attention to digital transformation on innovation activities

Digital transformation, as a global trend, has captured a lot of attention from management. How management allocates attention resources has become an important issue if a firm plans to pursue digital transformation. We provide an empirical analysis for this problem from the perspective of the attention-based view. We use data from 493 listed Chinese manufacturing firms from 2012–2020 to examine how the allocation of top management team (TMT) attention to digital transformation affects innovation activities. The results reveal that TMT attention to digital transformation and its intensity has a positive impact on corporate innovation activities, while the breadth of attention exhibits an inverted U-shaped impact on innovation activities. These findings are consistent with theoretical predictions. We also examine the moderating roles of external factors such as market conditions, corporate ownership, CEO duality, and policy support that distract managers’ attention, and reveal different characteristics of moderating role of Chinese state-owned firms. These findings provided a reference for further promoting digital transformation.

The impact of financial feedback on the innovative activity of companies: the moderating role of corporate governance quality

ABSTRACT This research analyzes performance feedback and corporate innovative activity in the context of corporate governance quality. The research goal is as follows: to examine the influence of social and historical performance feedback on R&D intensity of a firm, and to determine whether governance quality strengthens interconnection between performance feedback and R&D intensity. The sample consists of panel data on 283 South-Eastern Asian public companies from the manufacturing industry sector. The sample covers seven countries during the time period from 2015 to 2020, providing 1698 firm-year observations. It was discovered that sample firms are sensitive to positive and negative social performance feedback and do not respond to historical feedback. A comparative analysis between types of feedback has shown that firms value social feedback more than historical feedback. It was also established that higher corporate governance quality decreases performance feedback sensitivity among firms, which weakens the relationship between the feedback and innovative activity. Firms with weak governance systems value social performance feedback more than companies with mature governance. The study of these types of feedback in combination with the quality of corporate governance can be used by company executives in corporate strategic planning and operational decision-making. CEOs should be ready to use performance feedback information in addition to their personal judgment.

Factor market distortion and corporate innovation: Theory and evidence from China

The paper models the effect of distortion in factor markets on corporate innovation in a developing country, where the factor markets are underdeveloped in contrast to product markets. The distortion between factor markets and product markets has deteriorated the capability of firms to obtain profits, thereby dampening the incentives of firms to invest in innovation. Using a detailed firm-level dataset with manufacturing corporate innovation activities from 2008 to 2014, we testify to the prediction from the theoretical models that distortion depresses corporate R&D investment as well as R&D per capita. We strengthen our results using an IV approach to address reverse causality. Overall, our results have shed light on an emerging literature on distortion and innovation.

The impact of climate risk on corporate innovation: An international comparison

Employing an international sample of 10,012 firms across 62 economies spanning 2005–2017, we show that climate risk is negatively associated with corporate innovation activities. This finding is consistent with increased managerial risk aversion when managers perceive higher climate risk, leading to lower innovativeness. Through risk-buffering mechanisms, the negative association is weaker when firms are not subject to financial constraints, when corporate governance is stronger, and when the economy is more developed. Through risk-sharing mechanisms, better equity market development, greater trade openness, and greater insurance coverage can help mitigate the negative impact of climate risk on corporate innovation. Further analyses suggest that firms respond to climate change by inventing more green patents. Our study has implications for how to motivate corporate innovation in high-climate-risk economies.

Digital transformation and innovation activities: evidence from publicly-listed firms in China

This study investigates the relationship between digital transformation (DT) and corporate innovation activities. By studying the publicly-listed firms in China, we find that firms with higher levels of DT tend to spend more on research and development (R&D) and tend to generate more innovation outputs. The impact of DT on R&D expenditures is particularly pronounced for firms with more limited disclosure of information, more complex organizational structures, and for those who do not receive government sponsorship. We find no evidence that DT affects innovation through alleviating financial constraints or enhancing operating performance. Collectively, these findings offer novel and practical insights into the interaction between digitization and firms’ innovation.

Online sales and corporate innovation preference: The impact of e-commerce emergence on corporate innovation behavior

This study using the 2015 survey data obtained from private enterprises in China as the research sample, endeavors to scrutinize the impact of e-commerce on corporate innovation behavior. Initially, we establish a comprehensive theoretical framework to systematically analyze the repercussions of e-commerce on corporate innovation. Utilizing data sourced from China as a representative sample, we meticulously investigate the income incentive effect, competition catching-up effect, and awareness enhancement effect of e-commerce on corporate innovation. Furthermore, we delve into the nuanced impact of e-commerce on innovation outcomes, discerning variations contingent upon organizational structures, market contexts, and the prioritization of innovation within distinct companies. The empirical findings elucidate a substantive augmentation in corporate innovation activities attributable to the burgeoning influence of e-commerce. Among the predominant influencing mechanisms, the awareness enhancement effect emerges as the most pivotal, contributing significantly at 18.44 %, followed by the income incentive effect at 14.59 %, with the competition catching-up effect registering the lowest impact at a mere 11.32 %.

State Ownership Heterogeneity and Corporate Innovation: New Evidence from a Hierarchical Perspective

Unlike prior research, this study re-examines the relationship between state ownership and corporate innovation from a hierarchical perspective. Drawing upon institutional theory, our findings reveal the heterogeneous impact of state ownership, elucidating the positive role of central state ownership in fostering corporate innovation, while highlighting the inhibitory effect of local state ownership. This conclusion withstands rigorous scrutiny through a battery of robustness checks. Mechanism analysis indicates that central state-owned enterprises stimulate innovation by increasing innovation investment and enhancing efficiency, whereas local state-owned enterprises create obstacles for both innovation investment and efficiency. Our paper offers a hierarchical interpretation of the mixed evidence regarding the relationship between state ownership and corporate innovation. Whether state ownership serves as a facilitator or a hindrance to innovation depends on whether central or local state-owned enterprises dominate the national innovation process. Overall, this study offers new insights into the complex effects of state ownership heterogeneity on corporate innovation activities in emerging economies like China, advancing our understanding of the subtle relationship between corporate governance and innovation.

Digital economy, innovation, and firm value: Evidence from China

In this study, we investigate the impact of the digital economy development on corporate innovation and value, utilizing data from listed firms in China spanning the years 2011 to 2018. Our findings reveal a positive correlation between digital economy development and corporate innovative activities, particularly pronounced in growth-stage firms, labor-intensive enterprises, and companies in underdeveloped regions. To establish a causal relationship, we employ a quasi-experimental approach utilizing the “Broadband China” pilot program. Through a difference-in-difference framework, we establish a causal link between digital economy advancement and increased innovative activities. Furthermore, our research underscores that digital economy development enhances firm value by promoting innovation. These results support the view that the digital economy plays a pivotal role in increasing firm value and fostering sustainable development in the overall economy.

Common ownership and corporate innovation strategy

It is empirically challenging to test the effect of common ownership on corporate innovation as the observed impact of common ownership on corporate innovation is a net effect due to two offsetting powers: technological spillover and market stealing. This paper tends to mitigate that issue by investigating the impact of common ownership on the strategic features of corporate innovation. We analyze the effect of common ownership on corporate innovation activities using stacked difference-in-differences analyses based on events of financial institutional mergers and acquisitions. We find no significant effect of common ownership on research and development (R&D) expenditures, patent applications, and citations, whereas we find a positive effect of common ownership on exploitative innovation strategy. Our findings suggest that the weak market-stealing effect of exploitative innovation incentivizes common owners to encourage a higher weight of exploitative innovation among innovation outputs. Our study contributes to the current literature in three ways. First, it provides new evidence of the anti-competitive effect of common ownership. Second, it empirically examines competing theoretical predictions of common ownership impacts on corporate innovation. Third, it identifies common ownership as one of the determinants for variations of innovation strategy.

R&D 조세 지원 정책과 기업 혁신활동 간의 관계 연구

Purpose - The purpose of this study was to analyse the relationship between R&D tax support policy and firm innovation activity using data on firms engaged in 12 national strategic technology sectors.
 Design/methodology/approach - This study collected survey data from 664 companies engaged in national strategic technologies. The data were then analysed using the Propensity Score Matching (PSM) analysis.
 Findings - First, corporate R&D tax support had a statistically significant positive (+) relationship with firm innovation performance. Second, there was a statistically significant positive (+) relationship with incremental innovation, but there was no statistical significance with radical innovation. Third, there was a statistically significant positive (+) relationship with the firm's first innovation, but there was no statistical significance with the world's first innovation. Fourth, there was a statistically significant positive (+) relationship with the number of R&D projects of a firm. Finally, there was a statistically significant positive (+) relationship with a firm's open innovation.
 Research implications or Originality - First, in terms of policy effectiveness, the government needs to consider promoting R&D tax support policies in areas where R&D competition is fierce. For private companies engaged in the 12 national strategic technology fields, the R&D tax support policy is working in the direction of promoting corporate innovation activities, and this positive policy effect is likely to be effective in areas where R&D competition is fierce. Second, if the government wants to improve the quality of corporate innovation activities through R&D tax support policies, it needs to provide incentives higher than the current level.

Award-winning CEOs and corporate innovation

We examine the role of award-winning CEOs in corporate innovative activities. We find no significant difference in innovation outputs between firms of media award-winning CEOs and a matched sample of predicted winners. However, firms headed by winners of non-media awards generate significantly more patents and citations in the second and third year after the award. Firms led by CEO-winners of media awards attract more interest in Google and see an increase in the number of financial analysts that follow them. These effects likely exert more pressure on managers to meet short-term goals and hence impede the firms’ innovation. We do not find the same effects for firms that have CEOs who win non-media awards. The latter category sees an improvement in employee treatment following the award year. These different channels explain why innovation only increases for firms that are headed by CEOs who win non-media awards.

The Relationship between Alumni Network and Exploratory Innovation: The Mediating Role of Enterprise Risk-Taking

In an increasingly open innovation environment, executives, as the core of corporate management and the main body of decision-making and execution, play a significant role in implementing innovation-driven development strategies. Based on executives’ educational background, we constructed an executive alumni network platform using data from Chinese A-share listed companies from 2007 to 2019, and calculated the centrality indicators. The aim was to comprehensively explore the relationship between alumni networks and exploratory innovation in enterprises, and examine the mediating effect of enterprise risk-taking. Empirical results show that executive academic background networks can promote the development of exploratory innovation activities in enterprises. In other words, these networks provide the social relationships and trust foundation necessary to support innovation effectively. Enterprise risk-taking plays a mediating role in the relationship between alumni networks and exploratory innovation, underscoring the importance of risk-taking. Further research reveals that alumni networks have a significant positive impact on the sustainability of innovation, emphasizing the long-term value for corporate innovation. These findings demonstrate that alumni networks play a critical role in corporate innovation activities and provide theoretical support for advancing research in corporate innovation and sustained development.

Does cybersecurity risk stifle corporate innovation activities?

Cybersecurity risk has become a major concern for organizations due to its potential impact on a variety of corporate activities. This paper examines the impact of cybersecurity risk on corporate innovation activities and uncovers two important channels: risk-taking and precautionary savings. Employing textual analysis and machine learning techniques to estimate firms' ex-ante cybersecurity risk for a sample of U.S. listed firms, we show that cybersecurity risk is negatively related to corporate innovation. We address potential endogeneity biases and find the results to remain unchanged. Furthermore, our results are robust to alternative proxies, truncation issues, and external cybersecurity risk. We uncover the mechanisms underlying the main result by showing that the effects are more pronounced for firms with lower tolerance to risk and lower cash savings. Innovations of smaller, financially constrained firms and firms belonging to high cybersecurity risk and technology-intensive industries are affected more.

Bank price competition and enterprise innovation——Based on empirical evidence of Chinese A-share listed companies

This paper mainly discusses the influence and mechanism of bank price competition on corporate innovation activities. Taking China's A-share listed companies from 2013 to 2021 as a sample and constructing a Lerner index to measure bank price competition based on the data of 130 banks in China, a fixed effect model is used to analyze the influence of bank price competition on enterprise innovation. At the same time, the influence mechanism of bank price competition on enterprise innovation activities is analyzed from the perspectives of financing cost, credit availability and bank risk preference. The study found that the deepening of bank price competition can effectively increase the R&D investment of enterprises and promote the innovation output of enterprises. At the enterprise level, bank price competition can reduce the financing cost of enterprises and improve the availability of credit for enterprises, thereby alleviating the financing constraints faced by enterprises, encouraging enterprises to enter the innovation sector, and increasing R&D investment and innovation output. Moreover, bank competition can also improve the risk preference of banks so that innovative projects and enterprises with higher risks can obtain more credit support. In addition, the study also found that bank price competition can significantly promote the innovation input and output of private enterprises and small and medium-sized enterprises, but the promotion effect on the innovation input and output of state-owned enterprises and large enterprises is not obvious.

Effects of dialect connectedness between chairperson and CEO on corporate innovation in China

This paper examines the effects of dialect connectedness between the chairperson and CEO (DCCC) on corporate innovation activities. We find a negative association between DCCC and corporate innovation for China's listed firms. This negative relationship is more pronounced when the chairperson and CEO work in a different dialect-spoken city. Regarding corporate nature, we observe clear restrictions of DCCC on the innovation activities of non-state-owned enterprises, whereas the innovation of state-owned enterprises is less affected. We further investigate three mechanisms through which DCCC reduces corporate innovation. Our results suggest that DCCC restrains innovation by strengthening perceptions and trust between the chairperson and CEO and weakening the supervisory role of the chairperson. Further analysis indicates that emotional closeness between the chairperson and CEO cannot restrain corporate innovation in the short term if the CEO is pressured to be fired. In other words, DCCC cannot mitigate CEO career concerns within a short period.

신용등급과 기업의 혁신활동

This study examines the impact of credit ratings on corporate innovation activities. A sample of domestic securities-listed companies is selected, and changes in innovation activities are investigated when firms exhibit high sensitivity to credit ratings. Credit rating data from December settlement companies, spanning the period from 2002 to 2019, excluding the financial industry, is employed. A total of 2,179 company-year observations are used, which include corporate patent data as a proxy for measuring innovation performance, to examine the relationship between credit ratings and innovation activities. Furthermore, the study analyzes how these relationships vary across high-tech and non-high-tech industries, as well as investment ratings and speculative ratings.
 The empirical analysis reveals a significant positive relationship between the sensitivity of firms to credit ratings and their innovation activities. Specifically, firms that are more sensitive to credit rating downgrades show an increase in innovation activities, while no significant results are found for credit rating upgrades. This suggests that firms with a higher likelihood of credit rating downgrades are more likely to actively pursue innovation activities to maintain their current credit rating. Moreover, this asymmetric relationship between credit ratings and innovation is more pronounced in high-tech industries compared to non-high-tech industries, and in investment-rated firms compared to speculative-rated firms. Based on these empirical findings, this study provides important implications for stakeholders and financial market participants regarding the relationship between credit ratings and innovation.

ESG, R&D and Brand Value: Taking the Chinese Listed Companies of 3C Equipment Manufacturing Industry

Taking the listed 3C industries as research samples, this paper discusses the impact of corporate R&D investment on brand value and further explores the moderating role of corporate social responsibility in the relationship between the two. The results show that 1) Except for the companies with low brand value, R&D investment, and ESG performance have positive and significant effects on overall brand value, while the intersection of innovation performance and ESG has no significant effect on brand value. 2) CSR performance and active disclosure of CSR reports are beneficial to brand value at the early stage of brand value building.in terms of overall brand value, the input and output of corporate innovation activities and ESG performance have a significant positive correlation with brand value, but ESG performance has no moderating effect between corporate innovation and brand value. For sample companies with low brand value, R&D investment has no significant impact on brand value. Based on the above research results, this paper also puts forward corresponding suggestions.

Trade policy uncertainty and corporate innovation: evidence from resource dependence perspective

ABSTRACT Corporate innovation activities under uncertain environment have attracted growing academic attention, yet didn’t reach a consistent result, and the mechanism of firms’ interdependence with other organisations is not well explored. This paper is committed to uncover the latent mechanism from a resource-dependence perspective behind the environment–innovation relationship. Adopting an unbalanced dataset of Chinese public listed firms from 2006 to 2020, this study testifies the positive association between trade policy uncertainty (TPU) and corporate innovation, based on the two-way fixed empirical model. Furthermore, levels of buyer companies’ dependence on major suppliers and implicit government guarantee reinforce the strength of TPU’s prompting effect on innovation output. Our conclusions are robust to a series of sensitivity tests and two-stage least squares (2SLS) instrumental variable method. Heterogeneous analysis shows that the buyer dependence mechanism is exclusively prominent in high-technology firms, and the implicit government guarantee mechanism is more significant among non-high-tech firms.