The Effect Of Financing On Firm Innovation

It has been forty years since China launched the reform and opening-up policy in 1978.Looking back on the past,because of the comparative benefit of resource and low-cost of labour force,China's economy has developed rapidly and has achieved remarkable results.However,along with China development and globalization,low-cost benefit is diminishing,as well as demographic dividend.Faced with the challenge of the middle-income trap,economy is restructuring and slowing down with weighted-up debt leverage and excess capacity.In the era of "new normal",new driven power has to be explored to facilitate Pareto Optimality.Technology innovation is vital for a country's long-run economic growth and competitive advantage.Implementing an innovation-driven development strategy and accelerating the transition from a low cost advantage to an innovative advantage can provide a strong impetus for China's sustainable development.As the core of the modern economy,finance is an important promoter of the development of the real economy,and it is also a necessary guarantee for realizing innovation-driven transformation.Finance is the blood of innovation.Finance can provide sufficient funds and circulating channels for innovation.How to use capital's power to construct and improve their own innovation capability and realize the mutual transformation of innovation and business value is critical to our country's enterprises to win the increasingly fierce competition in the international market.As a result,the issue of the impact of financing on corporate innovation is increasingly being concerned by domestic and foreign scholars.However,in the current research,a comprehensive and systematic analysis of the impact of financing behavior on innovation is not much,to investigate the direct and indirect mechanisms between financing and innovation,and to explore the financing of corporate total innovation is even more rare.Under this background,this research is based on theories of financing structure theory,technological innovation,innovative resource concept,and total innovation management,focusing on the core issue of "the impact of financing on innovation",this research will look over the whole process of corporate innovation activities from the front-end decision to the end output.After a long period of large-scale collection and screening,the author manually constructed a patent data base containing nearly 5 million patents information.New connotation and measurement standards are added in each part,the impact of the financing behavior on each part is specifically examined,and by which channel financing influencing innovation is analyzed,and finally in the framework of corporate total innovation management.The impact and effects of financing on innovation would be investigated.The remainder of the paper proceeds as follows:(1)Literature reviews and theory combing.Through the review of financing structure theory,technological innovation,innovative resource concept and innovation management theory,combing the existing innovation research on financing impact,summarizing the theoretical results and research inadequacies of the existing literature,and providing theoretical support and argumentation basis for the study.This part builds a good page for the analysis behind.(2)A macro analysis of the status quo of China's corporate finance and innovation.This study focuses on the descriptive analysis at the macro level in terms of the current status and characteristics of corporate financing and innovation in China.Through a large number of data collection,the use of data envelopment analysis and advanced methods such as 3D patented topographic maps,the new perspectives and dimensions reveal the history,environment and problems experienced by China's corporate finance and innovation development.Provide a foundation for further empirical analysis and provides intuitive logical support.(3)An empirical analysis of the effect of financing behavior on firms' innovation performance,innovation characteristics and innovation decisions.This paper enriches the connotation and integrates new measurement standards for different stages of innovation,furthermore,introduces the "Herfindahl index" theory in the field of innovation,and discusses the impact of financing behavior on the various dimensions of innovation by taking 1220 A shares listed companies and 214 unmet enterprises as samples.(4)Empirical analysis of the path of financing to firms' innovation.This paper discusses the direct and indirect effects of related aspects of financing on the innovation performance under the influence of the enterprise management and management by conducting a confirmatory factor analysis and building a structural equation model.(5)Case studies of the impact of financing on the overall innovation of enterprises.This article under the framework of comprehensive innovation management theory,combined with a number of sample enterprises in China's manufacturing industry,through a field survey,interviews and questionnaires,a comprehensive analysis of the financing of its technical innovation,management innovation,cultural innovation and business model innovation Impact,built a"Stirling engine" model in which financing and innovation stimulate and contain each other.Based on the above research and demonstration work,this article mainly draws the following conclusions:(1)Definite but still complex impact on corporate innovation.On the one hand,financing will boost enterprises' investment in R&D and increase in the number of innovations.On the other hand,social supervision and information disclosure that go with the capital market financing and the pursuit of the short-term performance of the market value of enterprises makes enterprises to a certain extent.Abandoning the pursuit of high-risk,high-yield innovation has led to a decline in the quality of corporate innovation.Secondly,innovation will reduce the general applicability of innovation and novelty of innovation of enterprises,among which the industry characteristics of different companies will have a certain regulatory effect on them.In general,this is in line with the expectations of the "professional outlook hypothesis"and "quiet life hypothesis." In addition,financing also has a complex impact on the type of innovation.Comparing utility model and design patents,invention patents are significantly negatively affected by financing,indicating that corporate financing is more inclined to "growing" innovation than "breakthrough" innovation.In addition,compared with the previous research and intuitive thinking conclusions,this paper concludes that corporate innovation is more oriented to internal innovation after financing.This also provides a new direction for the theoretical community in future research.In addition,the nature of the company and its industry will play a different role in the above-mentioned influence.In a word,compared with state-owned enterprises,the leading companies are more flexible in their effect of tying up the financing of research and development with financing.(2)Financing scale,capital structure and shareholder structure have direct and indirect effects on innovation performance under the influence of corporate R&D,sales and management.Among them,the direct role takes the initiative,and the indirect role of R&D is the most obvious.The indirect effects of sales and management also change with the influence of different subjects.Different indirect effects also provide abundant possibilities for follow-up research.(3)Corporate finance is in an overall positive effect on total innovation.Based on the theoretical framework of aggregate innovation management,this paper finds that corporate finance has an overall positive effect on technological innovation.However,consistent with the empirical analysis of some conclusions,after the financing of enterprises,the number of innovations has increased and the quality of innovation has declined.Internal innovation has declined,and external innovation has risen.The impact on management innovation is at the same time positive and negative.A preliminary discussion was also made on cultural innovation and business model innovation.Under the background of innovation-driven strategy,the conclusions and achievements of this paper have important implications for the analysis of the relationship between financing and innovation by Chinese companies,better use of financing means to improve innovation capabilities,and the formation of core competitive advantages,and further strengthen financial services for China.The real economy and the improvement of the capital market are of great reference value for the innovation of enterprises.