A Study On The Incentive Effect For Technological Innovation Of Chinese Enterprises

How do the internal and external incentive tools and market environment influence corporate innovation in China? What is the core factor that stimulates technological innovation among Chinese enterprises? This is the key topic to be studied of this dissertation.This dissertation attempts to analyze this issue from three aspects: Firstly,the effect of government policies is studied from the prospective of High-tech Enterprise Certification;secondly,the impact of internal incentive is studied from the prospective of equity incentive;thirdly,the impact of market environment is analyzed from the perspectives of market competition degree and market demand scale.In this way,we try to explore the true mechanisms of technological innovation in China and propose suggestions for more effective policies.First of all,we measure the intensity of innovation investment by the ratio of R&D investment to operating income and the ratio of R&D investment to the investment in fixed assets.We obtain the newest micro-data of listed companies and use various forms of Ordinary Least Square method,Propensity Score Matching method and Regression of Discontinuity Design to examine the influence of High-tech Enterprise Certification on mid-term and short-term technological innovation among enterprises and find no significant impact.Secondly,we use the same methods to test the impact of equity incentive implemented by Chinese enterprises.After examining by various forms of OLS regression,Propensity Score Matching methods and Regression of Discontinuity Design,the newest micro-data of listed companies shows that equity incentive does not change ratio of R&D investment to operating income or the ratio of R&D investment to the investment in fixed assets.Equity incentive in China does not significantly influence coporate innovation in China.Furthermore,based on the enterprise level data of manufacturing industries in China between 2005 and 2007,this dissertation also analyses how enterprise technology innovation is influenced by market competition and demand scale.I find out an inverted-U shaped relationship between R&D investment and competition and a similar inverted-U shaped relationship between R&D investment and demand scale.But enterprises of different size innovate through different mechanisms: innovation of large enterprises is more demand-driven while that of small enterprises is more competition-driven.Robustness is tested and confirmed through an alternative choice of sample data and key indicators.Policy implication of this dissertation is as follows: under the condition that China has especially huge market scale,protecting moderate competition and cultivating several large enterprises in each industry may be the best industry policy to promote enterprises' persistent innovation.Finally,this dissertation puts forward policy suggestions to promote technological innovation among Chinese enterprises from the perspectives of improving the government's incentive policies,companies' internal incentive programs and optimizing the market environment.