A Study On The Effect Of Market Structure And Its Determinants On The Technological Innovation Of China's Enterprises

The labor-intensive and export-oriented development mode in China has been greatly challenged due to the financial crisis in U.S.A. recently. Although the active fiscal policy and appropriate loose monetary policy can ease it temporarily, however, in the long run, the only way of breaking the predicament for the development of enterprises in China is to innovate. Technological innovation of enterprises can promote the progress of enterprises and industries, and then improve the technology and enhance the knowledge intensivity and added value of the products. Therefore, it's both theoretically and practically significant to stimulate the technological innovation and to study the factors that impact the technological innovation of China's enterprises. There are many factors that are beneficial to a nation's innovation ability, such as the availability of high-quality entrepreneurs, the effective protection system of the intellectual property, the sound corporate ownership and governance structure, the availability of adequate R&D investment, and the perfect incentive mechanism for technological innovation. Besides, the market structure has an important impact on the technological innovation of the enterprises. Since most of the existing literatures focus on the input and incentive of innovation, this dissertation will study the relationship between the market structure and the innovation of the enterprises, in a more objective perspective.First of all, an analysis of the basic situation of the technological innovation of the enterprises in China was provided in the pespective of both total quantity and the propotion. It shows that the total quantity of technological innovations have increased significantly with the development of national economy. However, the propotion of the technological innovations have not increased accordingly, and even have decreased when examined in the perspective of the enterprises.Secondly, an analysis of the impact imposed by both the process innovation and product innovation on the technological innovation was provided, based on the degree of competition and the scale of the enterprises, which are the two basic factors that affect the market structure. When analyse the degree of the competition and its impact on the innovation, we found that the excessive competition is not beneficial to the technological innovation of our national enterprises. It can also be found that the excessive competition may encourage the enterprises to pay more attention to the product innovation, but it can not promote their ability to innovate, and it even can be an important factor that impedes the technological innovation. When analyze the scale of the enterprises and its impact on the technological innovation, we found that the large enterprises had absolute advantage both in the process innovation and the product innovation. But the innovation efficiency of the large state-owned enterprises in China is not high, and the technological innovation has not been the determinant of the development of enterprises with various scales.Thirdly, since a great deal of foreign capital has been introduced in the past years, the impact of the entrance of the foreign-funded enterprises on the market structure of China was examined. It shows that the foreign-funded enterprises have an undoubtedly impact on the market structure of China, but they enhance their status and propotion in the technological innovation and even the whole economy in China only by their large scale, instead of their demand and enthusiasm for the technological innovation. In fact, theirs is no more than that of the domestic enterprises. The foreign-funded enterprises have been expected to raise the level of the technological innovation of the domestic enterprises, however, it failed. On the contrary, it have stimulated the import of the high-tech equipment, which may increase some kind of process innovation. But when it comes to the more significant and important product innovation, the foreign-funded enterprises have obviously negative effect.It can be concluded from this study that the administrative monopoly is the most important factor and even the determinant factor, that affect the market structure in the transitional China. The state-owned enterprises have gained a great deal of monopoly profit under the protection of the administrative monopolies, but it has impeded the promotion of the technological innovation as well.Finally, an analysis of the impact of the market strucuture on different technological innovation models was provided, the result shows that in the fierce competition from the foreign-funded enterprises and the state-owned monopoly enterprises, it is neither realistic nor feasible to advocate a high level independent innovation model. The imitative innovation model and cooperative innovation model may be more suitable for the small and medium-sized enterprises.