Summary:
While studying the issue of trade and enterprise innovation, the existing literature treats enterprises with independent legal personality as a separate sample, ignoring the fact that a large number of business groups exist. In reality, there is often a great deal of non-market behavior amongst the subsidiaries of groups with independent legal personality, and through the strategic allocation of internal resources, business groups can maximize the interests of the group as a whole, rather than those of individual subsidiaries. Currently, some literature has investigated issues such as “hollowing out”, tax avoidance and pollution transfer within enterprise groups, but there is a lack of research focusing on the performance and coping strategies of business groups in the face of external shocks. Unlike non-group affiliates, enterprise groups have unique internal labor and capital markets and are able to allocate resources on a wider scale, and therefore may have better economic performance under external shocks. In order to clarify the above issues, in this paper, we investigate the differential impact of import competition on the innovation of firms with different organizational forms by using the large-scale tariff cuts after China's WTO accession as the quasi-natural experiment. Before starting the empirical study, we first provide a theoretical framework based on the theory of ‘organizational resilience’. We analyze in detail the path mechanism of business groups to cope with external shocks from three perspectives: strategic adjustment in the internal market, cross-industry diversification, and organizational restructuring of the group. Afterwards, we conducted descriptive statistics using data on Chinese manufacturing firms and hand-arranged relational networks of enterprise groups, and carried out empirical tests using the DID strategy and the event study method. The research in this paper provides some interesting findings: (1) The number of group affiliates is only about 29% of the total number of firms in the market, but contributes most of the output, employment and exports. (2) Most of the innovation of Chinese firms is contributed by group-affiliated firms. Specifically, the number of patent applications by group-affiliated firms accounts for about 70 percent of market share, while non-affiliated firms account for only about 30 percent. (3) The impact of import competition on innovation performance varies according to the organizational form of the firm, showing a dampening effect on single firms and a promoting effect on group-affiliated firms. (4) The reason for the better innovation performance of group-affiliated firms under import competition is that enterprise groups not only make use of the internal market to strategically allocate resources among subsidiaries in the same industry and adjust the focus of R&D and innovation across industries, but also adjust their organizational structure to revitalize internal innovation resources by eliminating inferior firms. (5) Further studies show that there is a division of labor for innovation within the group. Specifically, import competition significantly promotes the deepening and expanding innovation of innovative group-affiliated firms, but only promotes the expanding innovation of non-innovative ones; compared with private business groups, import competition has a greater effect on the innovation promotion of state-owned business groups; and import competition increases the number of utility model and design patents filed by the group's subsidiaries, but at the same time inhibits the number of invention patents filed. This paper not only finds that the innovation risk of a single enterprise is higher, but also, reveals the reasons why enterprise groups have better innovation performance under external shocks, and identifies the potential risk of low-quality innovation of business groups, which provides new ideas for China to co-ordinate openness and safe, and high-quality development, as well as important policy insights for accelerating the development of new-quality productivity. Based on the conclusions of this paper, we put forward feasible policy recommendations: first, against the backdrop of the current turbulent international situation and intensifying uncertainty in the external environment, the importance of business groups in promoting the innovation-driven development strategy should be highly emphasized. It should support and develop high-quality enterprise groups with innovative capabilities, promote their investment and development in key national industries and fields, and cultivate new innovative growth points. Second, reduce the institutional costs and barriers for business groups to fulfil their innovation functions. Further simplify the system of talent flow and asset flow within the group, improve the allocation efficiency of talent and capital among firms, and smooth the circulation channels of innovation factors by formulating a unified system standard for the group. Third, further reduce the system costs within the SOE group by reducing the equity hierarchy, and improve its reaction speed in dealing with shocks. Fourthly, through the establishment of enterprise science and technology innovation awards and titles for experts and talents, incentivize firms to shift to an innovative development model that improves quality and preserves quantity, and the risk-resistant capacity of single firms will be improved by tilting the policies and taking the lead in setting up enterprise alliances.
魏浩, 封起扬帆. 进口竞争、创新风险与创新质量——基于单一企业和企业集团的再考察[J]. 金融研究, 2024, 533(11): 57-75.
WEI Hao, FENG Qiyangfan. Import Competition,Innovation Risk and Innovation Quality:A Re-examination Based on Single Firms and Business Groups. Journal of Financial Research, 2024, 533(11): 57-75.
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