Financial Constraints,Export And Firms’Innovation:Mechanism And Evidence With Chinese Data

Firms’innovation is one of the hot topics in economic research fields, the latest perspective about innovation should be firm heterogeneity perspective, then analyzing firms’innovation decision based on firm heterogeneity factors. Till now, the existing research mainly based on such as firm size, market structure and so on, seldom considering firms’productivity heterogeneity, innovation experience and circulative accumulation effect and some other firm heterogeneity characteristics. Firms’ productivity heterogeneity is concerned by researchers of international trade field, and then it had been a hot topic to study firm’s export from the productivity heterogeneity perspective. Furthermore, firms’export is not only affected by financial constraints, but also have some links with the ability of innovation, and financial constraints also have some direct effect in firm’s innovation. Thus, there has been a close link in the chain of financial constraints, export and innovation obviously. The purpose of this article is to summarize the chain mechanism among the three variables. Meanwhile, we use the firm level data of China and try to find the corresponding evidence. The theoretical significance of this study is not only widing the vision of innovation theory, but also putting forward some policy implications to help Chinese firms’going out of trap and realizing industrial upgrading.Theoretically, this paper examines the effect of financial constraints and exports on innovation decision of Chinese local enterprises from a comprehensive viewpoint. We summarize the mechanism of the two factors on innovation and capture them though setting up a theoretical model and put forward three key empirical propositions. It shows that there exist some causal connections between the two factors and firms’innovation decision. The connection and its effect can exert separately and be enlarged through the chain mechanism of "financial constraints-export-innovation". Specifically, this article sets up a theoretical model based on the classical model setted by Gorodnichenko and Schnitzer (2010) considering the reality of Chinese firms’innovation and puts forward three empirical proposition as follows:financial constraints have significantly negative effect on firms’innovation decision; export has significantly positive incentive effect on firms’ innovation decision without considering financial constraints; in consideration of external financial constraints, export firms’innovation incentive will decline along with the increase of external financing cost. Empirically, in this paper we consider firms’ownership heterogeneity as the basic factor of the empirical analysis and add the total factor productivity factors in which firms’innovation decision for further development to verify accumulation effect of firms’innovation. Then, based on the absence between existing literature on financial constraints and export and comprehensive view, this article gives empirical analysis using Chinese firm-level data and probit model to exam chain mechanism of "financial constraints-export-innovation". It gives detailed empirical analysis based on the formal finance from the perspective of ownership as well as informal finance from regional perspective. The conclusions can be summarized as follows:Firstly, total factor productivity has significantly positive incentive effect for all ownership type of the firms, and it also means that the self-selection effect about the firms’innovation activities is obvilous. Meanwhile, firms’innovation has obvious accumulation effect based on the lagged TFP as the innovating result. It means that the firms will tend to be innovative if they carried out innovation activity last year. So, the improvement of firms’institutional environment or TFP is especially important for firms’innovation.Secondly, firms have more ability to obtain loans from banks and other financial institutions, the more ability to relive its possible financial constraints, and thus to conducive innovative activities. Bank credit do has positive effect on firms’ innovation and the firms which are easy to access to external finance are more innovative. But it is much different between state-owned firms and private firms. For state-owned export enterprises, good access to external financing is not incentive factors for their innovation. They can enjoy large profits from exporting simply by its special monopoly advantage. Therefore, more external financing is not bound to induce more innovation.But for the private export firms, financial constraint is one of the major obstacles to innovate.Thirdly, as an important approach of financing under informal financing system, trade credit has important influence on private firms’innovation behavior, but it’s different among provinces.From the scope of private firms around the country, trade credit cause inhibition on export firms’innovation. Through the comparative analysis among these three typical provinces such as Zhejiang, Jiangsu and Guangdong, we can draw the following conclusions:In Zhejiang province, trade credit plays positive role in promoting private exporting firms’innovation, and has not produce significant crowding-out effect. To some extent, trade credit can be a complement to formal finance. While Jiangsu and Guangdong in which have relatively sufficient foreign capital, trade credit does not produce a significant effect on private exporting firms’ innovation.