Innovation In State-owned Enterprises Research Articles

Policy burden and technological innovation of state-owned enterprises

State-owned enterprises (SOEs) possess unique characteristics and play pivotal roles within the economy, necessitating them to bear significant policy burdens. Based on China's A-share listed firms from 2008 to 2021, we empirically analyzed how the policy burden influences SOEs’ capacity for technological innovation. Unlike conventional views, we found that the policy burden significantly improves SOEs’ innovation capability, and this conclusion holds true even after multiple robustness tests. Mechanism research shows that government subsidies and positive media coverage are the transmission pathways for policy burdens to promote innovation in SOEs. Further research revealed that the policy burden is more important in promoting innovative advancement in central and competitive SOEs. Our conclusion confirms the positive aspects of the policy burden and contributes to research on the innovative effects of the policy burden on SOEs.

Anti-corruption campaign and SOEs innovation: The role of the central inspection group in China

Using central inspections of China aimed at SOEs as a quasi-natural experiment, we investigate the causal effect of anti-corruption campaigns on the innovation of state-owned enterprises (SOEs). Based on the sample of China's SOEs, we find that the central inspections lead to an uplift in the quantity of SOE innovation at the expense of innovation quality. Further analysis indicates that owing to the unique motivation of political promotion, SOE managers improve the operation indicators valued by the government when subjected to political intervention in the shape of anti-corruption, such as the innovation quantity, referred to as the political monitoring mechanism. Eventually, there will be a decline in the quality of innovation that will supplement the long-term value of SOEs since the central inspection does not contribute to corporate governance.

The industrial internet and green technology innovation

This study selects a sample of A-share listed companies in China's heavy pollution industry from 2014 to 2022 to examine the impact of the industrial Internet on enterprises’ green technology innovation. Based on the findings, the application of the industrial Internet not only improves the level of green technology innovation among enterprises in China's heavy pollution industry, but it also improves their organizational capacity to promote such innovation. In addition, the application of the industrial Internet is more conducive to the improvement of green technology innovation in state-owned enterprises, compared to private enterprises.

Directors assigned by non-state shareholders and innovation in state-owned enterprises

This paper selects a sample of China's A-share listed companies from 2012 to 2022 to study the impact of non-state shareholders' assigned directors' governance on innovation activities and performance. It is found that assigned directors from non-state shareholders can effectively promote innovative R&D inputs and outputs of state-owned enterprises (SOEs) and that political affiliation can positively regulate the overall impact of assigned directors from non-state shareholders on the improvement of the innovation level of SOEs.

Non‐state shareholder governance and technological innovations of state‐owned enterprises: The moderating effect of executive compensation incentives

AbstractThis study focuses on the impact mechanism of non‐state shareholder governance on technological innovation in state‐owned enterprises (SOEs) from the perspective of executive compensation incentives, using listed manufacturing companies of SOEs from 2014 to 2020 as research samples. The research findings indicate that the mere ownership of shares by non‐state shareholders has no significant impact on technological innovation. However, the delegation of executives by non‐state shareholders contributes to enhancing technological innovation in SOEs. So Improving technological innovation in SOEs is a crucial objective in the ongoing deepening and enhancing actions of the new round of state‐owned enterprise reforms.

Nonstate capital participation and innovation in state-owned enterprises: Scale, structure and quality

This paper measures enterprises’ innovation from three perspectives—the scale, structure and quality of innovation output—and investigates the innovation effect of mixed ownership reform (MOR). We find that MOR enhances the scale of innovation output, optimizes the innovation structure, and improves the innovation quality of state-owned enterprises (SOEs). It follows that the introduction of multiple ownership supervision and governance mechanisms by SOEs is conducive to promoting enterprise innovation. MOR can alleviate the principal–agent problem in SOEs, improve internal control quality, inhibit SOE financialization, and thus indirectly facilitate innovation.

Non-State Shareholder Participation and Technological Innovation in State-Owned Enterprises

The Third Plenary Session of the 18th CPC Central Committee established mixed ownership system as the main policy of SOE reform, and as the main form of SOE "mixed reform", can non-state shareholders' participation promote the technological innovation of SOE? Based on the research samples of China's A-share state-owned listed companies from 2010 to 2017, this paper finds that the participation of non-state shareholders promotes the technological innovation of SOE, and this result is more robust when the participation of non-state shareholders exceeds 10%, i.e., when the participation of non-state major shareholders is more robust. The results of the mediation effect model show that non-state shareholders' equity participation plays a positive role in the level of state-owned technological innovation by improving the incentive channel for executive compensation, while the results of the mediation effect test of the financial assets investment channel are not verified. This paper provides theoretical and empirical support for the rationality and effectiveness of mixed ownership reform from the dimension of technological innovation.

Sustainability-Oriented Low-Carbon Innovation in SOEs: A Case Study of Shanghai Metro

State-owned enterprises (SOEs) encounter various constraints on sustainability in low-carbon development due to institutional hybridity. This study aimed to examine how SOEs develop sustainability-oriented innovation (SOI) toward low-carbon development. Drawing on a case study of Shanghai Metro, we developed a process model for sustainability-oriented low-carbon innovation (SLI) in SOEs. The model illustrated that implementing a national low-carbon strategy introduces environmental, social, and financial constraints on sustaining value pluralism for SOEs, triggering the actors to develop SLI involving sensing and idea generation, configuration, and transformation, resulting in innovative low-carbon operational processes, products/services, and business models which reconcile environmental benefits, financial returns, and social welfare. This paper enriches the emerging research on SOI and extends the existing understanding of low-carbon innovation. Beyond this, the findings also offer a new lens of SLI to the conventional research and managerial practices concerning SOEs’ hybridity and low-carbon development.

Financial Distress and the Commitment to Promoting Innovation in State-Owned Enterprises: A Critical Perspective

Financial distress in State-Owned Enterprises (SOEs) has been a problematic issue for a long time. By 2020, the total debt of SOEs in Indonesia reach 1.682 trillion Rupiahs, whereas 68% out of all SOEs that receive state capital injections are facing bankruptcy. However, a more critical perspective still needs to investigate how commitment to promoting innovation relates to financial distress in SOEs. The existing studies of financial distress in SOEs have mainly focused on analyzing technical and structural factors and the predictive models using company financial indicators. This study aims to analyze the financial distress and innovation in SOEs critically. This study uses official data of PT Krakatau Steel from 2015-2020 and employs the combined analysis method. Quantitative regression analysis analyzes the company's financial distress throughout the period. In contrast, qualitative content analysis analyzes the relevance of the company's innovation commitment in the same period. The study shows that apart from ineffective capital structure decisions, low commitment to innovation is an important factor influencing financial distress in SOEs. The prospect of restructuring as a short-term strategy is also discussed.

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.

Does carbon emission trading system induce enterprises’ green innovation?

To control total carbon emissions and achieve the emission reduction target, the Chinese government has implemented the carbon emission trading system (CETS), which has been applied in two provinces and five cities since 2013. This study uses the environmental regulation policy of the pilot CETS as a quasi-experiment to investigate whether the implementation of this environmental policy induces green innovation among enterprises. This study employs a difference-in-differences model to conduct an empirical test using green patent data of A-share listed enterprises from 2002 to 2018. The results indicate that the CETS pilot-policy-induced green invention innovation in enterprises. Notably, compared with non-state-owned enterprises, the pilot policy is more conducive to promoting green innovation in state-owned enterprises.

Employee equity incentive, executive psychological capital, and enterprise innovation.

The input and deployment of human resources, such as senior executives and the core employees involved in different innovation processes, is key to developing enterprise innovation activities. Under the same framework, it is crucial to explore how employee equity incentive and senior executives' psychological capital affect enterprise innovation. This paper's research sample comprises listed companies that implemented equity incentives in the A-share market from 2010 to 2021, examining the relationship between executive psychological capital, and enterprise innovation. This study found that: (1) Employee equity incentive and executives' psychological capital can significantly improve the quality of innovation output while promoting enterprises to increase the quantity of innovation outputs; (2) Executive psychological capital contributes to the intermediary effect between employee equity incentive and enterprise innovation; (3) R&D investment has a positive moderating effect on employee equity incentive, senior executives' psychological capital and enterprise innovation; (4) The innovation incentive effect brought by the implementation of stock options by enterprises is more significant, which also makes the psychological capital of executives maintain a positive role in enterprise innovation; (5) In addition, the positive effects of employee equity incentive and executive psychological capital on enterprise innovation are affected by different property rights. The positive effects of employee equity incentive and executive psychological capital on enterprise innovation in state-owned enterprises are not high.

Innovative human resource management measures to improve the competitive ability of state-owned enterprises

With the rapid development of China's economy, the reform and innovation of state-owned enterprises have become a hot issue of social concern. As an important part of the core competitiveness of enterprises, the innovation and development of human resources management is not only an important guarantee for state-owned enterprises to maintain vitality and creativity and enhance market competitiveness, but also an important guarantee for state-owned enterprises to be invincible in market competition and achieve sustainable development. Therefore, state-owned enterprises should take human resource management as the core of strategic innovation and development strategy change, giving full play to its advantages while further improving operational efficiency. In this paper, human resource management is the core of research and analysis, and the current situation and problems of human resource management in state-owned enterprises are analysed, studied and discussed, and then strategies and methods to improve the competitiveness and innovative development of state-owned enterprises are proposed.

How does carbon emission trading scheme affect enterprise green technology innovation: evidence from China's A-share non-financial listed companies.

More and more emphasis is placed on the common development of economy and ecological environment in China's development strategy, and one of the key solution is green technology innovation of enterprises. This paper takes the carbon emission trading scheme carried out in China in 2013 as a quasi-natural experiment and uses the data of China's A-share non-financial listed companies and the DID method to empirically test the impact of the scheme on enterprise green technology innovation from the micro level. The results suggest that the carbon emission trading scheme has a significant role in promoting enterprise green technology innovation, mainly through the innovation of green practical patents and alternative energy-based patent. Using a series of robustness tests such as dynamic effect test, placebo test, and PSM-DID, it is found that the results are still valid. Further analysis finds that debt financing will weaken the role of carbon emission trading scheme in promoting enterprise green technology innovation. And the carbon emission trading scheme plays a greater role in promoting green technology innovation in state-owned enterprises, enterprises belonging to areas with strong pollution control intensity and high pollution industry.

Green innovation of state-owned oil and gas enterprises in BRICS countries: a review of performance

ABSTRACT State-owned enterprises (SOEs) are a major force in energy markets in BRICS countries, including in national energy innovation systems. In this research, we investigate whether some of the largest oil and gas SOEs in BRICS countries – Brazil’s Petrobras, Russia’s Gazprom, India’s ONGC, China’s PetroChina, and South Africa’s PetroSA – are greening their innovation to foster low-carbon solutions in line with shifting government Nationally Determined Contributions (NDCs) on climate change. We compare the innovation priorities of oil and gas SOE firms in these countries, and specifically their efforts in clean energy from 2005 to 2020. Using an original data set, we set forth case studies on five SOEs and highlight differences in their approaches across a number of different features: the level of government ownership; firms’ revenues and financial health; national government policy; and global oil prices. We assess factors influencing performance in clean energy innovation and study each firm’s success in registering patents for specifically targeted energy technologies. Our findings show that all five SOEs demonstrate only modest efforts in greening of their energy innovation outcomes. We observe their heavy reliance on oil revenues to finance innovation and note how ongoing responsibility to avoid oil and gas shortages is stifling green innovation. We recommend policy avenues for governments to realign SOE practices with climate action and specifically NDCs.

Research on the impact of mixed ownership reform on innovation of state-owned enterprises: Evidence from Chinese industrial enterprises

This article focuses the research sample on Chinese State-Owned Enterprises (SOEs), using the Beyond-logarithmic Stochastic Frontier Production Function and the ordinary fixed effect model to examine, and evaluates the influence of mixed ownership reform on the innovation of SOEs from the perspective of incentive and constraint mechanisms. Our study investigates the impact of the corporate governance, policy burden, and environmental regulation. The main conclusions are as follows. First, mixed ownership reform can enhance the innovation capability of SOEs. Second, mixed ownership reform stimulates innovation of SOEs by optimizing corporate governance and reducing policy constraints on enterprises which regulate enterprise decision-making behavior. Third, the environmental regulation also affects SOEs’ innovation. This study can provide a reference for the government to further deepen the reform, optimize the living environment of SOEs, improve environmental regulations and promote the sustainable development of economy.

How does the digital economy promote green technology innovation by manufacturing enterprises? Evidence from China

With the rapid development of the digital economy and the increasingly severe environmental issues, the role of the digital economy in green innovation has been attracting more attention; however, only a limited amount of research has been done in this area. Therefore, based on matching data at the city and manufacturing enterprise level in China during 2011–2018, this paper attempted to integrate the digital economy (more specifically, the Internet and digital finance) with resource allocation and green technology innovation together in a unified scheme. Our study confirmed that the digital economy could significantly promote green technology innovation by manufacturing enterprises, but that digital finance was the dominant feature. Resource allocation efficiency played a partial mediating role between digital economy and green technology innovation. Furthermore, considering the heterogeneity in enterprise ownership and industrial pollution, the digital economy had a more positive effect on green technology innovation in state-owned enterprises (SOEs) and high pollution industries. As for the heterogeneity of region, the Internet significantly contributed to green technology innovation in regions with different levels of development. In the eastern region of China, especially, the influence of digital finance on green technology innovation was more significant. In view of these findings, this study provides important insights for strengthening the integration of the digital economy with green transformation, emphasizing the rationality of resource allocation, and formulating policies for different enterprises.

Supporter or Supervisor? The Role of Chief Financial Officers in Corporate Innovation

Like the chief executive officer (CEO), the chief financial officer (CFO) is an important corporate player. However, compared to the role of CEOs, research on the factors influencing corporate innovation has paid very little attention to the role of CFOs. Based on the perspective of role theory, we measure CFO role performance by organizational identification to explore the role of CFOs in corporate innovation. Employing the availability of CFO organizational identification data from a survey of listed firms in China, we find that: (1) CFO organizational identification is negatively associated with innovation output in state-owned enterprises (SOEs) and positively associated with innovation output in non-state-owned enterprises (non-SOEs); (2) corporate misconduct experience positively moderates the relationship between CFO organizational identification and innovation in SOEs; (3) CFO financial industry experience positively moderates the relationship between CFO organizational identification and innovation in non-SOEs. Our results show that CFOs play the supervisor role in innovation in SOEs and the supporter role in innovation in non-SOEs. Our research provides theoretical and practical references for companies to sustainably drive innovation.

Ownership, innovation, and variable institutional quality

AbstractResearch question/issueInnovation has been a constant feature of the tales of transition and transformation. State ownership as the engine of innovation and technological change may be juxtaposed with the “liability of stateness” and the notion that “privatization works.” This study seeks to investigate the relationship between legal ownership and innovation inputs and outputs, while accounting for the moderating effect of institutional quality on this relationship.Research findings/insightsWe exploit unique data from a very large‐scale panel survey of enterprises (65,750 firms between 2006 and 2014) in Vietnam, a fast‐growing but understudied transition country, and apply advanced methodologies that control for the endogeneity of institutions. Our findings point to the continued dominance of state‐owned enterprises (SOEs) in innovation activities in Vietnam. However, the returns to innovation in SOEs accrue only up to a point and improving institutional quality serves to diminish their advantage over privately‐owned enterprises (POEs) and to level the playing field.Theoretical/academic implicationsWe employ an integrated framework that develops predictions from resource dependence, agency, and institutional theories to explore the direct and contingent influences of ownership and institutional quality on firm‐level innovation activities. Our study contributes to the growing literature on state ownership and innovation in transition and emerging economies and the recent calls for greater attention to local institutional context and revising the existing theories on “state underperformance.”Practitioner/policy implicationsThis study offers insights to policy makers in enhancing the quality of local institutions. Higher‐quality institutions moderate the advantages state ownership confers and ameliorate the disadvantages associated with private ownership.

Do R&D Tax Credits Incentivize Radical or Incremental Innovation? Evidence from China

Many countries use R&D tax credits to promote firm innovation. Using the data of A-share listed companies from 2012 to 2019, we use a fixed effects model to examine the heterogeneity effect of the R&D tax credit in China on radical and incremental innovation based on the perspective of firm property rights, scale, and age under the framework of heterogeneity. The results show that the R&D tax credit significantly stimulates radical and incremental innovation, but the incentive effect on radical innovation is weak. Further heterogeneity analysis shows that the incentive effects of enterprises with different complementary resources and innovation capabilities are different. Specifically, we find that the R&D tax credit has a stronger impact on incremental innovation of state-owned enterprises and radical innovation of non-state-owned enterprises. Compared with small firms and start-ups, it has a stronger incentive effect on the radical and incremental innovation of large-, medium-sized, and incumbent firms. Finally, the results are consistent and robust using the Heckman two-step method, core indicator substitution method, and change lag period. This paper deepens the theoretical research on the heterogeneity effect of tax incentives on firm innovation, while also providing insights on how to design R&D tax credits to raise radical innovation for emerging economies.