Innovation Output Of Firms Research Articles

Does government transparency promote firm innovation? Evidence from China

ABSTRACT This study investigates the relationship between government transparency and firm innovation, exploring the mechanisms through which government transparency influences firm innovation using Chinese provincial-level and firm-level data from 2013 to 2020. The findings reveal a significant positive association between government transparency and both firm innovation input and output. Mechanism analysis suggests that government transparency enhances firm innovation by fostering improvements in the regional institutional environment. Furthermore, the study identifies heterogeneity in the effects, indicating that state-owned enterprises (SOEs) and high-tech firms derive greater benefits from government transparency. This research contributes to the existing literature by addressing the role of government transparency in promoting firm innovation and offers valuable insights for practical applications.

Do firms’ performance act as a catalyst of innovation: empirical evidence from innovative Indian manufacturing firms

PurposeThis paper aims to explore whether firms’ performance determines innovation using a sample of Indian manufacturing firms. The impact of innovation on firms’ performance across specific countries has been discussed in the literature. However, the effect of firms’ performance on innovation output, especially for a developing country like India, remains an open question. Against this backdrop, this paper investigates whether firms’ performance determines innovation in Indian manufacturing firms.Design/methodology/approachThe authors use patent filing information to instrument innovation and total factor productivity to instrument firms’ performance. The patent data are collected from the Patent Search and Analysis Software database and firm-level data from the Centre for Monitoring Indian Economy’s Prowess database. The study uses a sample of 309 Indian manufacturing firms from 2005 to 2021. Given the count nature of the data set used in this study coupled with over-dispersion issues, the authors have used the negative binomial regression to estimate the empirical specification of the models. There could be a possible problem of endogeneity due to the contemporary nature of innovation and firms’ performance. Therefore, to address the possible issues of endogeneity in the model, the authors have used the Generalized Method of Moments (GMM) estimators for more robustness checks of the empirical results.FindingsThe empirical results exhibit a positive and significant impact of firms’ performance on the innovation output, validating that firms’ performance determines innovation in Indian manufacturing firms. The posterior estimation results using GMM estimation also corroborate that firms’ productivity is a determining factor for the innovation output of Indian manufacturing firms. Furthermore, empirical results exhibit that the ex ante innovativeness of the firms substantially affects the current innovation. This validates that the firms’ prior experience, learning by doing and past innovative efforts are more likely to precipitate more innovation in the current period.Originality/valueThis paper’s main contribution is empirically estimating whether firms’ performance determines innovation, which is hardly discussed in the existing innovation literature, specifically using Indian manufacturing industries. Further, it adds to the existing literature in two other prominent ways. First, this paper investigates whether firms require ex ante expertise to innovate or if a firm starting from scratch can innovate significantly without any hindrances. Second, it enriches the literature by instrumenting innovation in output terms with the patent application against input measures of innovation, such as research and development expenditures, acquisition of machinery and equipment, while discussing the relationship between firms’ performance and innovation, specifically in the context of a developing economy like India.

Unveiling the influence of global innovation networks on corporate innovation: evidence from the international semiconductor industry

In this study, we investigate the influence of global innovation networks (GINs) on the innovation output of semiconductor firms. Utilizing negative binomial regression and network analysis, we assess how network positions, specifically degree, betweenness, and closeness centrality, affect firms’ innovation performance, revealing significant positive impacts. Moreover, our results identify a positive U-shaped relationship between structural holes in GINs and innovation performance, suggesting that while moderate network engagement aids innovation, too much can be detrimental. This research provides key insights into optimizing GIN participation for better innovation results in the competitive semiconductor sector.

The U-shaped impact of export quality on firms' innovation output: Empirical evidence from China.

Ensuring product quality plays a pivotal role in the successful execution of new product development and serves as a cornerstone for fostering innovation within enterprises. In this study, we investigate the impact of export quality at the firm level on innovation outcomes, utilizing data from Chinese publicly listed companies and customs data spanning the period from 2010 to 2015. Our analysis uncovers a notable U-shaped relationship between export quality and innovation output in Chinese manufacturing enterprises, particularly with respect to invention patents and utility model patents. Subsequent exploration of heterogeneity reveals that this U-shaped relationship is consistent for non-state-owned enterprises, firms operating in high-technology sectors, young firms, firms exporting to high-income countries, firms situated in the eastern region, and firms engaged in processing trade. Additionally, we find a positively significant effect of Chinese manufacturing export quality on the innovation output of firms exclusively involved in general trade. This paper's key contribution lies in identifying the U-shaped influence of export quality on firms' innovation output and its applicability. The findings suggest that Chinese manufacturing enterprises need to improve the quality of their export products on a long-term and sustained basis. A series of quality standards for the dynamic development of different industries should be formulated, and actively safeguard the innovation needs of these enterprises, thereby enhancing the value chain position of Chinese manufacturing enterprises.

Capital tax incentives and firm innovation: evidence from accelerated depreciation in China

PurposeThis study aims to investigate the influence and impact mechanism of capital tax incentives on firm innovation.Design/methodology/approachThis study employs the difference-in-differences (DID) method, in conjunction with the exogenous impact of accelerated depreciation (AD) pilot policy. This study selects Chinese listed companies from 2010 to 2017 as the research sample.FindingsFirstly, AD exerts a substantial positive effect on the quantity and quality of the innovation output of firms, and the positive impact results primarily from heightened investment in fixed assets, particularly, machinery and equipment. Secondly, the influence of the policy is pronounced in non-state-owned enterprises, mature enterprises, less capital-intensive enterprises and non-high-tech industries, which all exhibit strong innovation incentives. Lastly, the tax incentive policy significantly stimulates firm innovation in the short term, but its long-term impact on innovation incentives lacks statistical significance.Originality/valueThis study highlights the significance of capital tax incentives in facilitating the innovation process in firms.

Does Supply Chain Network Centrality Enhance or Impede Firm Innovation: Evidence from China

ABSTRACT This study mainly investigates the effects of supply chain network centrality on firm innovation output. We uncover that supply chain network centrality has a negative impact on firm innovation. The negative impact of network centrality on corporate innovation quantity is stronger when economic policy uncertainty is higher and the firm belongs to high-tech industries. Similarly, the detrimental effect of network centrality on corporate innovation quality is magnified when the level of marketization is lower and the firm belongs to high-tech industries. Firms with high supply chain network centrality are associated with more severe short-sightedness, higher transaction costs, and greater operational risks, and thus inhibits firm innovation output.

The Impact of R&D Subsidies and Non-R&D Subsidies on Innovation Output of Biopharmaceutical Firms

Government subsidies are important to the improvement of innovation level and sustainable development of biopharmaceutical firms. This paper empirically analyses the impact of government R&D and non-R&D subsidies on the innovation output of biopharmaceutical firms. We establish static, and dynamic panel mediation effect models using 2013–2019 data from China’s listed biopharmaceutical companies. Additionally, we further explore the mediating role of R&D investment between R&D subsidies and innovation output. The findings show that, first, R&D subsidies contribute to the innovation output of biopharmaceutical firms, while the effect of non-R&D subsidies is insignificant. Second, the study of the mechanism shows that R&D subsidies can significantly promote firms’ innovation output through R&D investment in the static mediating model; but interestingly, the R&D subsidies fail to promote innovation output in the dynamic mediating model through R&D investment, perhaps due to the sustainable impact of innovation. Based on the above results, this paper provides suggestions and insights for the formulation of different types of subsidy policies and the improvement of the innovation level of biopharmaceutical firms.

Measuring process innovation output in firms: Cost reduction versus quality improvement

Process innovation is an important part of the innovation activities of firms and supposed to significantly contribute to the returns from innovation. Analysing this link is complicated, however, due to a lack of quantitative indicators on the outcome of process innovation. This article presents empirical evidence on such quantitative measures that have been collected in the German part of the Community Innovation Survey (CIS). Two main output dimensions are distinguished. The share of unit cost reduction owing to process innovation represents the extent to which new process technology affects a firm's cost function. The increase in sales that can be attributed to higher product quality resulting from new or improved process technology is linked to the impact of process innovation on a firm's demand function. The empirical analysis based on firm-level panel data shows that the link between firm characteristics, firm performance and the two types of output differs as expected by conceptual considerations. The results suggest that the two proposed measures of process innovation output are useful indicators to capture the type and magnitude of the outcome firms obtain from their process innovation efforts.

Impact of government subsidies on innovation of Chinese biopharmaceutical firms: Based on kink threshold model.

Do government subsidies achieve the goals of stimulating firm innovation and macro-regulation? Existing studies have not reached a consistent conclusion. We will study the incentive effect of government subsidies on innovation of biopharmaceutical firms, analyze the optimal interval of government subsidies, and improve the efficiency of government subsidies. Thus, based on kink threshold model using data from Chinese biopharmaceutical listed companies from 2013-2019, this study analyzes the impact of government subsidies on innovation inputs and outputs. Government subsidies can stimulate innovation inputs and outputs of biopharmaceutical firms. Meanwhile, such subsidies have a significant threshold effect on innovation inputs and outputs, and there is an optimal interval effect. Additionally, concerning enterprise ownership, government subsidies have a more significant role in promoting innovation of non-state biopharmaceutical firms. Regarding regional differences, such subsidies have a more significant role in promoting innovation of firms in the less economically developed central and western regions. This study reveals the influence pattern of government subsidies, and provides insights and suggestions to formulate subsidy policies and enhance innovation.

From transaction to co-creation in Geely’s acquisition of Volvo Cars: impact on innovation output and market performance

ABSTRACT The last decade has witnessed numerous cross-border mergers and acquisitions (M&As) undertaken by emerging market multinational enterprises (EMNEs). Only a few EMNEs achieve co-creation with the acquired partner by mobilising and enhancing their knowledge resources. This paper centres on how post-M&A co-creation is achieved and what its impacts are on the innovation output and market performance of firms. We employed an in-depth longitudinal case study of the acquisition of Volvo Cars by Geely, supplementing the case study with patent portfolio analysis and business analysis. We link innovation and cross-border M&A literature to address co-creation post-M&A. The findings showed how the high level of freedom given to the acquired firm allowed it to preserve innovation capacity and, later, successfully integrate with the acquirer. The patent portfolio analysis demonstrates that the firms’ innovation outputs became more similar over time, demonstrating the successful knowledge integration achieved in the case.

How does the exclusive license stimulate firm’s subsequent innovation? The role of innovation financial input

We study the influence of an innovation policy tool, namely, an exclusive license on firm innovation. Based on an extensive dataset of Chinese high-tech firms, we show that exclusive licenses significantly promote firm innovation output. Further, from our results, we conclude that the most efficient duration of exclusive license policies on promoting innovation is roughly three years. Mechanism analysis also reveals that the positive effects of exclusive license on innovation come from stimulating firm innovation financial input. Our findings extend the literature on innovation drivers, and provide a useful reference for other emerging economies to formulate more effective innovation strategies.

How environmental regulations and corporate social responsibility affect the firm innovation with the moderating role of Chief executive officer (CEO) power and ownership concentration?

At present, many economies are suffering from environmental problems that have significant effects on the climate and life of human beings, thus, the governments and institutions work to reduce the industrial negative effects on the environment. Based on the Porter Hypothesis, agency theory, and management and organization theory, this study examines the connection between environmental regulations, corporate social responsibility and firm innovation with the moderating role of CEO power and ownership concentration. Importantly, this study divided CEOs into male and female CEO. This study classifies firm innovation into two kinds, such as firm input innovation and firm output innovation. This study selects the sample of Pakistani manufacturing firms and uses the panel data for the period 2008 to 2018. For the analysis purpose, this study employs ordinary least squares (OLS), fixed-effect (FE) model, generalized method of moments (GMM). For more robust results, this study employs the feasible generalized least square (FGLS) model. Based on the findings from the empirical analysis, this study concludes that environmental regulations and corporate social responsibility have a positive relationship with firm innovation (Input and Output). Moreover, a powerful CEO and ownership concentration are valuable for firm innovation (Input and Output), because these factors are positively connected with firm innovation (Input and Output). Majorly, this study contends that environmental regulations and corporate social responsibility are positively connected with firm innovation (Input and Output) because of the interactive role of CEO power. This study supported the role of both male and female CEOs for firm innovative practices. Therefore, firms of developing economies should also consider the female CEO. Besides, environmental regulations and corporate social responsibility also positively connected with firm innovation (Input and Output) because of the interactive role of ownership concentration. Moreover, this study offers various policy implications for governments and policymakers.

Impact of eco-city construction on firm innovation in the case of China.

More and more scholars have paid attention to the importance of coordinated development between ecological environmental protection and economy. Eco-city construction has been implemented in many countries in recent years; however, quantitative research on its economic impact has only started. This study establishes a theoretical model of the impact of eco-city construction on a firm's research and development (R&D) investment. The numerical simulation results show that eco-city construction promotes a firm's R&D investment and long-term earnings from two aspects: (1) macro policies increase a firm's exogenous uncertainty and (2) ecological capital enhances a firm's business conditions. The empirical study matches the microscopic data of 115 cities and 2612 listed firms in China from 2008 to 2017, and results show that eco-city construction has a significant positive impact on firm innovation input and output. Further research shows that this positive impact mainly comes from ecological environment and ecological economy, and there is regional heterogeneity. For the first time, this study affirms the positive role of eco-city construction from the perspective of firm innovation activities at the micro level. It provides strong evidence for the government to realise the sustainable development of firms by accelerating eco-city construction.

Paid Family Leave, Inventor Mobility, and Firm Innovation

We exploit the adoption of US state-level Paid Family Leave (PFL) laws to test whether family-friendly policies affect firm innovation. We find that PFL policies increase the innovation outputs of firms whose employees are more exposed to these laws. The stronger attraction and the higher retention of female inventors contribute to the output gains. Tests at the state level suggest that younger inventors move into states after PFL adoption, and the move-in inventors are generally more productive than the move-out inventors at the personal level. Further tests at inventor level show that females are less likely to drop out from the inventor career after PFL adoption. Overall, the behavior change in inventor career choices is the main channel through which PFLs affect firm innovation.

Do tax incentives and direct funding enhance innovation input and output in high-tech firms?

Tax incentives and direct funding are two different public support instruments used to facilitate the formation and growth of firms. Limited empirical evidence has compared the effectiveness of two different policies and their interactions for firms. In this paper, we investigate the main and interaction effects of these interventions on high-tech firms. Since large and small firms innovate in different ways, we compare the use of both incentives by Iranian high-tech SMEs and large firms through a factorial design technique. This paper presents significant differences both across instruments and across firm size. Results show that for SMEs, tax exemption has a significant effect on R&D investment, and funding has a significant effect on R&D investment, R&D employees, and new products. However, there aren't any interaction effects between instruments. For large firms, funding is an effective instrument for R&D investment. Also, there is an interaction effect between tax incentives and direct funding on new products. These findings indicate that funding is a more effective instrument than tax exemption, especially for SMEs, but suggest some changes in supporting policies of high-tech firms in Iran.

Market uncertainty, innovation of firms in alliance and alliance partner characteristics

PurposeWhile prior alliance literature has focused on how firms exploit alliance strategies to enhance performance and innovation, little is known about whether market uncertainty increases, decreases or has no effect on innovation outcomes of firms involved in alliances, and under what conditions these firms promote innovation in an uncertain market through alliances. Relatedly, innovation research has examined the impact of environmental uncertainty on innovation; however, this line of research does not answer the question in the alliance context.Design/methodology/approachUsing data of firms engaged in alliances in the US pharmaceutical and biotechnical industries between 1990 and 2015, the authors examine firms' alliance partner characteristics and innovation outputs in terms of innovation quantity and exploratory innovation.FindingsWe find that market uncertainty hampers innovation quantity and exploratory innovation of firms involved in alliances, because in this environment, relational risks and coordination challenges outweigh the benefits of knowledge sharing from partners. However, the authors find that alliance partners' characteristics such as a different industry and different country origins mitigate the negative effect of market uncertainty on these firms' innovation by offering new business opportunities and enhancing their learning capability.Originality/valueThis study contributes to the alliance literature by addressing a significant question of whether and how market uncertainty matters in the innovation output of firms involved in alliances and how these firms address the environmental challenges and promote innovation. The study also contributes to innovation research by delineating the nature of market uncertainty and its impact on innovation in an alliance context.

Effects of foreign investors on energy firms' innovation: Evidence from a natural experiment in China

Abstract Based on a natural experiment of foreign investment access relaxation, this paper investigates impacts of foreign institutional investors (FIIs) on energy firms' innovation. It is still unclear the real effect of FIIs on energy firms' innovation in the literature. We detect a significantly positive relationship between foreign institutional investors and innovation outputs of energy firms using firm-level data. Three possible mechanisms driving our findings are explored. Foreign institutions increase the proportion of R&D expenditures in revenues, limit the scale of related party transactions to improve corporate governance, and widen the pay gap within firms to stimulate the efficiency of human capital. Our main findings are weakened in state-owned companies with high financing constraints. Jointly, our findings offer clear policy implications to emerging markets by identifying the effects of FIIs on energy firms' innovation.

The Relationship Between Top Management Team Diversity and Firm Innovation Output: A Meta-Analysis

We conduct a meta-analysis on the relationship between top management team (TMT) task-related diversity and firm innovation output. Empirical evidence from 74 primary studies containing 25,968 firm observations shows that TMT task-related diversity has a positive relationship with innovation output. Building on this finding, we demonstrate that TMT task-related diversity has a positive association with radical innovation, but not with incremental innovation output. Moreover, we find positive relationships between TMT task-related diversity and innovation output quantity as well as innovation output quality. In some additional analyses, we further show that TMT bio-demographic diversity is not related to firm innovation output. Thus, it seems that diversity in expertise, skills, and knowledge are important for fostering innovation in firms. The study contributes to research on the TMT diversity-firm innovation relationship. Based on the findings, we develop opportunities for future research.

Does external R&D matter for family firm innovation? Evidence from the Italian manufacturing industry

This article focuses on the relationship between external R&D and firm innovation output. Using a sample of Italian manufacturing firms over the period 2007–2009, we estimate the effect of R&D collaboration with the aim to detect differences between family and non-family firms. The study shows that the R&D acquired from external sources has a positive impact on innovative sales, especially for family firms. This result holds when using either the extensive or the intensive margins of R&D collaboration, thereby suggesting that family companies have a greater capacity to translate external R&D into tangible economic benefits. We also find that family firms benefit from the diversity of R&D collaboration.

The Effect of a Financial Support on Firm Innovation Collaboration and Output: Does Policy Work on the Diverse Nature of Firm Innovation?

Although prior studies explored the effectiveness of innovation policy in terms of firm’s collaboration and innovation output, few studies examined a nature of these effects. This paper addresses this gap by investigating policy effects on firm’s collaboration regarding a type of partnerships and innovation output in terms of a novelty. The empirical analyses from logistic regression and propensity score matching with the data from Korea Innovation Survey 2014 of manufacturing industries reveal that public support leads to increased collaboration and innovation output in overall. Moreover, a magnitude of effects is cumulative along with the extent of a policy scheme. However, the effect on innovation output seems to be only captured by a high degree of the support. These results implicate that a certain threshold level of intervention is needed to trigger innovation outcome. This paper contributes to the understanding of policy effectiveness regarding a nature of innovation activities.