Firm Innovation Research Articles

Can climate-related information disclosures strengthen green innovation capacity? Firm-level evidence using textual analysis

This study presents novel insights on modelling the implications of voluntary climate-related information disclosure on corporate green innovation (GI) in China. Based on a constructed dataset of 13,664 firm-year observations between 2014 and 2020, we quantify climate-related disclosures under the Task Force on Climate-Related Financial Disclosures framework using computerized text analysis. Our findings show that climate-related information disclosure substantially bolsters corporate green innovation after addressing endogeneity concerns. However, the promoting effects vary drastically across industry attributes, ownership structure, and environmental regulations. Further channel analysis demonstrates that “greenwashing” behaviours and financial constraints adversely moderate the nexus between climate-related information disclosure and green innovation of firms, while digital finance positively moderates it. Overall, this study enriches the literature and offers practical implications for firms engaging in the green innovation process more effectively under a more transparent environment-related disclosure system.

Internal Social Capital and Product Innovation of Food Firms

Internal Social Capital and Product Innovation of Food Firms

Data Mining Utilizing Various Leveled Clustering Procedures on the Position of Workers in a Data Innovation Firm

The reason of this paper is to clarify dynamic clustering, the divisive and agglomerative dynamic clustering techniques. It fundamentally centers on the concept of the divisive different leveled shapes as well known as the top-down approach by creating a workflow appear, dendrograms, clustered data table which accumulated the clusters based the chosen property, and appear the isolated between each cluster with the assistance of an data mining device called Python. The DIANA dynamic approach utilized data tests of the list of laborers in a Data Advancement firm to induce clusters from the position column inside the data test table. In this work, we in addition executed genuine infers by creating barchart that shows up the ages of the chosen agent sets plotted against the positions which are the Engineers, Assistants, Workers and Troughs.

Entrepreneurship and innovation in worker cooperatives and conventional firms: the role of external cooperation

AbstractThrough the comparison of conventional firms (CFs) with worker cooperatives (WCs), which are a type of collective enterprise with significant experience in cooperation, this research aims to analyse the influence of external cooperation on the two most prominent factors for the success of enterprises: entrepreneurship and innovation. To this end, a research model is proposed based on contributions from the stakeholders’ perspective of the resource-based view of the firm and tested with data from a survey conducted on WCs and CFs located in two Spanish regions with a long tradition in the cooperative movement. The results highlight that the influence of external cooperation on innovation performance is more relevant for WCs and demonstrate that these collective firms are not disadvantaged in innovation compared to CFs. Furthermore, the results suggest that WCs have a more remarkable ability to compete and cooperate simultaneously, that is, to coopete, due to their participative nature.

Knowledge spillovers or R&D collaboration? Understanding the role of external knowledge for firm innovation

Knowledge spillovers or R&D collaboration? Understanding the role of external knowledge for firm innovation

Corporate misconduct and innovation: Evidence from the pharmaceutical industry

We examine the relationship between corporate misconduct and pharmaceutical firm innovation and performance. Pharmaceutical firms obtain significantly fewer new product approvals by the U.S. Food and Drug Administration (FDA) following corporate regulatory violations, lawsuits, and Securities and Exchange Commission (SEC) regulatory enforcement actions. We also examine the potential reasons why innovative capacity is reduced for culpable firms. Following instances of misconduct, pharmaceutical firms are 50 percent less likely to engage in business expansions, engage in significantly fewer new strategic alliances and partnerships, and are awarded fewer government R&D grants. We attribute these results to the reputational loss associated with public knowledge of corporate misconduct. In support of this hypothesis, we find pharmaceutical firms experience negative cumulative abnormal stock returns (CARs) surrounding SEC enforcement announcements, and misconduct incidents increase the probability of analyst concerns. Overall, our results are consistent with the reputational loss associated with corporate misconduct being an important factor in future reductions in pharmaceutical firm innovative capacity.

Do high administrative‐level cities promote firm technological innovation? A novel analysis based on patent applications

AbstractThis paper examines the impact of China's administrative hierarchy of cities on firm innovation through the incentive policies that mobilize local governments to promote firm innovation. Using difference‐in‐differences approach, this paper finds that high‐level cities significantly and robustly enhance the number of firm patents. The results also suggest that alleviating firm financing constraints and leveraging human capital advantages are important mechanisms. In addition, high‐level cities mainly facilitate non‐state enterprises and small firms, and the quality of utility model patents was significantly lower and the quality of invention patents was higher in high‐level cities. This paper also presents several policy implications.

Mitigating excessive financialization or promoting innovation? Productivity effects of China's carbon emission trading scheme

AbstractThe success of the carbon emissions trading scheme (ETS) in fostering a mutually beneficial outcome for both the economy and the environment depends on its ability to enhance total factor productivity (TFP). We investigate the diverse implementation of this market‐based environmental policy across Chinese provinces using a staggered Difference‐in‐Differences model. Our study delves into the mechanisms of the ETS, particularly focusing on financialization and innovation, utilizing listed companies in Chinese stock markets as our research sample spanning from 2009 to 2022. Our analysis shows several key findings: (1) ETS facilitates the growth of TFP in micro‐firms, positively influencing other listed companies within the same sector and city. However, its impact on TFP is notably weaker in regions with robust environmental information disclosure and stringent environmental regulations. (2) The ETS helps alleviate resource misallocation stemming from excessive financialization of firms, prompting them to reallocate investments from financing activities to production and operation activities, thus enhancing TFP. (3) Contrary to expectations, the ETS does not directly influence TFP through enhancing firm innovation ability; instead, it encourages directed technical innovation toward green technology over digital technology. This study highlights the effectiveness of the ETS in promoting firm development and sheds light on resource management practices within firms.

Can IP tribunals increase firm patent applications?—Empirical evidence from China

This paper aims to examine whether property rights protection can enhance firm innovation. To address the endogeneity problem and establish a causal relationship, we adopt the establishment of Intellectual Property Tribunals (IP Tribunals) in China as a natural experiment and employ the Difference-in-Differences (DiD) approach for estimation. By measuring firm innovation via patents and invention patent applications, we find that establishing IP Tribunals can significantly boost firm innovation. Furthermore, we investigate the heterogeneity of our baseline results and discover that privately-owned firms, smaller-sized firms, non-high-tech firms, and firms located in less marketized areas experience a larger improvement in innovation. This finding suggests that this institutional improvement provides greater protection to disadvantaged firms. Breaking regional protectionism and relaxing firm financing constraints are two possible mechanisms through which IP Tribunals can enhance firm innovation. Our results provide new evidence on how institutional change affects economic growth in China.

Who captures the state? Evidence from irregular awards in a public innovation grant program

AbstractResearch summaryThis study utilizes the administrative data of an innovation grant program in a major emerging economy to study which firms are best positioned to capture the state and access resources beyond what their rule‐complying merits command. We trace the grant allocation process and directly observe occurrences of rule‐violating funding. We show that firms vary in capability to secure irregular awards, depending on factors such as geographic proximity and the social and bureaucratic setting within which entrepreneurs and officials interact. Furthermore, by comparing the actual allocation of irregular awards with the counterfactual scenario in which recipients were evaluated solely based on grant rules, we conclude that crony capitalism, rather than bureaucratic heroism, is the primary driver of irregular awards.Managerial summaryGovernments often use innovation grant programs to promote firm innovation, but these programs sometimes fail to achieve their objectives due to grant officials violating policy rules to provide resources to undeserving firms. We study a public funding program in a major emerging economy to analyze the bureaucratic structure and the social dynamics within which entrepreneurs and bureaucrats interact to identify the sources of state‐resource misallocation. We find that geographic distance, intragovernmental checks and balances, and the lack of direct social intermediary connecting entrepreneurs with bureaucrats help reduce the likelihood of collusion for state‐resource misallocation. Our results generate insights to help guide the (re)design of public funding programs, particularly in countries with low levels of transparency and public accountability.

CEO characteristics and R&D expenditure of IPOs in China

In the rapidly evolving landscape of Mainland China's stock market, there is a substantial correlation between the research and development (R&D) spending of companies that are going through initial public offerings (IPOs) and the characteristics of the CEO. This study aims to investigate how CEO traits influence the allocation of resources towards R&D activities within the context of IPOs in Mainland China. The CEO plays a pivotal role in shaping the strategic direction and innovation agenda of companies, especially during the IPO process where firms seek to raise capital and expand their operations. Policymakers must comprehend the influence of CEO attributes on research and development spending, investors, and managers seeking to foster innovation and sustainable growth in Mainland Chinese firms. This research will focus on analyzing CEO traits such as educational background, prior experience, age, tenure, risk aversion, and management style, and their influence on the decision-making process regarding R&D investment. This study intends to determine significant links between R&D expenditure and characteristics of CEOs by looking at a sample of IPOs in the stock market of Mainland China. The analysis takes into account many factors like industry competition, market dynamics, regulatory environment, and firm-specific traits. Data on CEO traits, company finances, and R&D spending will be analysed using quantitative techniques like regression analysis and event research procedures. Furthermore, qualitative research techniques like case studies and interviews will offer deeper understandings of the contextual elements influencing the IPO market in Mainland China as well as the mechanisms underpinning these linkages. All things considered, this study will advance knowledge of how CEO traits affect R&D spending in the particular setting of initial public offerings (IPOs) on the stock market of Mainland China. The findings will offer valuable insights for policymakers, investors, and managers navigating the complexities of fostering innovation and sustainable growth in Mainland Chinese firms undergoing IPOs.

Strategic Alliances and Firm Innovation in Global Markets in Turkey

Purpose: The aim of the study was to investigate the strategic alliances and firm innovation in global markets in Turkey. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Strategic alliances significantly enhance firm innovation in global markets, particularly in Turkey. These partnerships enable firms to access resources and knowledge, driving innovation through joint R&D and technological advancements. In Turkey, alliances with multinational corporations and global partners accelerate technology adoption and best practices, boosting local firms' innovation capabilities and expanding market reach. Despite challenges like cultural differences and regulatory issues, effective alliance management can greatly benefit firms by improving competitiveness and innovation outcomes globally. Unique Contribution to Theory, Practice and Policy: Resource-based view (RBV) theory, transaction cost economics (TCE) theory & social network theory may be used to anchor future studies on strategic alliances and firm innovation in global markets in Turkey. Enhance organizational capabilities in alliance management through training programs and knowledge-sharing platforms that emphasize best practices in partner selection, negotiation, and collaborative innovation. Develop supportive regulatory frameworks that encourage cross-border alliances and facilitate intellectual property protection, thereby reducing legal uncertainties and enhancing trust among international partners.

Beyond profit in family businesses: ESG-driven business model innovation and the critical role of digital capabilities

PurposeThis study aims to analyze the interaction between environmental, social and governance (ESG) practices and digital capabilities in promoting business model innovation (BMI) in family firms. Specifically, it researches how ESG practices influence BMI in family firms, breaking down this influence into its ESG components.Design/methodology/approachWe used microdata from the Flash Eurobarometer 486 survey, conducted by the European Commission in 2020, which provides detailed data on the challenges and obstacles faced by European businesses. The survey included telephone interviews with key managers from 2,483 family-owned businesses across 27 EU countries.FindingsThe analysis found that the environmental, social and governance dimensions of ESG significantly enhance business model innovation in family firms. Additionally, the interaction between environmental practices and digital capabilities significantly enhances business model innovation in family firms, while the interactions between social or governance practices and digital capabilities do not show significant effects.Research limitations/implicationsThe study supports the theoretical framework that integrates ESG practices into business model innovation, providing empirical evidence for the concept of sustainable business models. It emphasizes the importance of environmental sustainability, social engagement and robust governance in driving innovation.Practical implicationsFamily business managers can use the findings to guide their innovation strategies by integrating ESG practices with digital capabilities. Policymakers can also benefit from understanding the importance of supporting ESG practices and digitalization in family businesses, fostering a regulatory environment that encourages sustainable innovation.Originality/valueThis research expands the theoretical understanding of how ESG practices and digital capabilities interact to foster BMI, particularly in family firms. By breaking down ESG practices into environmental, social and governance components, the study offers a detailed view of their interaction with digital capabilities.

The analysis of firm web data for predicting company innovativeness: a comparison across different types of innovation

ABSTRACT This paper investigates which of the core types of innovation can be best predicted based on ’firms’ website data. In particular, we focus on four distinct key standard types of innovations in firms: product, process, organisational, and marketing innovation. Web mining of textual data on the websites of firms from Estonia, combined with the application of artificial intelligence (AI) methods, turned out to be a suitable approach to predict firm-level innovation indicators. The key novel addition to the existing literature is the finding that web mining is more applicable to predicting marketing innovation than the other three core types of innovation. As AI-based models are often black-box in nature, for transparency, we use an explainable AI approach (SHAP - SHapley Additive exPlanations), where we look at the most important words predicting a particular type of innovation. Our models confirm that the marketing innovation indicator from survey data was clearly related to marketing-related terms on the ’firms’ websites. In contrast, the results on the relevant words on websites for other innovation indicators were much less clear. Our analysis concludes that the effectiveness of web-scraping and web-text-based AI approaches in predicting cost-effective, granular and timely firm-level innovation indicators varies according to the type of innovation considered.

Configuring Technology Resources and Organizational Practices for Innovation Success

Overview: As novel technologies and organizational practices become available, innovation managers must identify and invest in those best suiting their needs. To ensure their firm’s innovativeness, innovation managers must integrate these new technologies and organizational practices into their resource portfolio and deploy them in combination with existing resources. In this article, we demonstrate the orchestration of technologies and practices that set the most innovative firms apart from less innovative. Using the fsQCA method, we found that high-performing firms configure their technological resources and organizational capabilities in bundles, whereas their less innovative counterparts are preoccupied with investing in technologies alone. Resource orchestration management is therefore a novel innovation management capability, which may accelerate a firm’s innovative capabilities. We offer practitioners managerial implications that emphasize the development of innovation managers’ resource orchestration capabilities.

The impact of centralized band purchasing of pharmaceuticals on innovation of Chinese pharmaceutical firms: an empirical study based on double difference models.

In 2018, China began to gradually promote the pilot policy of centralized band purchasing of medicines. Implementing this policy has resulted in a significant decrease in drug prices. However, there needs to be a clear consensus on the impact and mechanism of action on the innovation of pharmaceutical companies. Therefore. Taking the data of Chinese Shanghai and Shenzhen A-share pharmaceutical listed companies from 2016 to 2022 as a sample, this paper empirically investigates the impact of the centralized banded purchasing policy of drugs on the innovation of pharmaceutical enterprises by using a double difference model and further analyzes the mechanism of its action. The results show that implementing the centralized banded purchasing policy can promote pharmaceutical enterprises' innovation input and output, which is robust under the parallel trend and placebo tests. Further exploring the impact mechanism of the centralized band purchasing policy on pharmaceutical enterprises' innovation, it can be found that it promotes innovation inputs through three channels: government subsidies, enterprise profits, and operating income. In addition, the impact of centralized band purchasing on enterprise innovation is heterogeneous in terms of region, enterprise nature, and scale. Therefore, the positive effects of the centralized band purchasing policy on promoting innovation in pharmaceutical enterprises should be fully recognized, and enterprise heterogeneity should be taken into account when implementing the policy. This study provides empirical evidence on the implementation effect of the centralized banded purchasing policy and provides lessons for continuously optimizing the policy to promote the high-quality development of pharmaceutical enterprises.

Leveraging customer knowledge obtained through social media: The roles of R&D intensity and absorptive capacity

Previous research has highlighted the benefits of leveraging knowledge generated through internal R&D and external customer knowledge to drive firm innovation. While it is understood that both these knowledge sources may have complementary and/or substituting effects, our understanding of the mechanism through which they affect innovation performance is limited. Therefore, we develop a theory and empirically test a multiple moderation model to investigate the effect of customer knowledge obtained through social media on innovation performance, contingent on the firm’s realized absorptive capacity and R&D intensity. Using PLS-SEM multi-group analysis, we find that firm R&D intensity complements realized absorptive capacity in integrating customer knowledge from social media for innovation performance. Given resource constraints, firms with a low level of R&D intensity should focus on cultivating a strong realized absorptive capacity to maximize the benefits of social media. In contrast, firms with high R&D intensity need not overly prioritize developing realized absorptive capacity.

Core-technology competence in perspective of supplier concentration: the mechanism of strategic aggressiveness and the influence of environmental uncertainty

ABSTRACT This study highlights the necessity of drawing more attention to core-technology competence, a specific dimension of firm innovation competence, when examining the overall supplier concentration-innovation relationship to respond to the unprecedented challenges in the supply chain and technological advancement. Still, the mechanism of strategic aggressiveness and the conditioning role of environmental uncertainty are not well explored in this concern. Therefore, it is necessary to combine these factors to analyse. Using the data from Chinese manufacturing firms from 2012 to 2020 and based on resource dependence theory, we construct a panel data model to conduct empirical analysis and obtain the following results: supplier concentration can hinder firms’ core-technology competence; supplier concentration would constrain firms’ strategic aggressiveness, subsequently impairing core-technology competence; while supplier concentration can limit strategic aggressiveness, high environmental uncertainty can mitigate these negative effects. The findings are beneficial for firms to cope with current challenges and enhance core-technology competence based on the global supply chain crisis and environmental uncertainty.

THE IMPACTS OF INNOVATION EFFICIENCY AND GOVERNMENT SUBSIDY ON EXTERNAL FINANCING: EVIDENCE FROM CHINA

Subsidies from the government and financial resources from external investors play critical roles in supporting firm innovations. We develop a model to empirically investigate the role of firm innovation efficiency in government subsidy allocations and the joint effect of innovation efficiency and government subsidies on external investor decision-making in China. We collect panel data from 337 firms in China over ten years (2011–2021). The results show an inverted U-shaped relationship between innovation efficiency and government subsidies. Both government subsidies and innovation efficiency are positively associated with external financing. Government subsidies positively moderate the impact of innovation efficiency on external financing. The findings provide empirical evidence of the complex relationships among firm innovation efficiency, government subsidies and external financing. In this study, insights are provided into how Chinese government officials and external investors interpret signals of firm innovation. The findings of this study can also be used by managers to attract financial resources and by investors to make investment decisions.

FAMILY FIRM NARCISSISM: CONCEPTUALISATION, MEASUREMENT, AND RELATIONSHIP TO INNOVATION

Family firm behaviour can be a potential root of innovation in family firms. Building on the theoretical perspectives of socioemotional wealth and narcissistic organisational identification, we introduce a novel concept and new measure for family firm narcissism (FFN). We suggest that FFN influences family firms’ innovation orientation (i.e., strategic innovativeness) and realised innovation outcome (i.e., digital inventiveness). Additionally, we assume that industry IT intensity, as an indicator of environmental pressure regarding digital transformation, moderates these relationships. To test the hypotheses, we investigated a longitudinal cross-industry sample, comprising 1,302 firm-year observations of S&P 500 family firms and analysed it with regression models. The results indicate that FFN is positively related to strategic innovativeness and negatively related to digital inventiveness. We further find that industry IT spending intensity amplifies both linkages. Our study contributes to the discussion on the family innovation agenda by (1) introducing the new concept and measure for FFN and (2) underlining its controversial impact and effectiveness on two central manifestations of innovation under the boundary conditions of digital transformation.