Research On Industrial Policy,Corporate Governance And Technology Innovation

Manufacturing is of vital importance to the national economy,forming the basis of national development.It not only creates material wealth and new knowledge to support all the other economic sectors,but also is an essential driving force to promote employment and economic growth.And technology innovation is the fundamental power for China to shift from the great manufacturing nation to the powerful manufacturing nation.Taking the listed manufacturing companies in China from 2007 to 2016 as the research objects,this paper explores the relationships between the industrial policies,the corporate governance and the technology innovation,as well as the influences and action mechanism brought by the differences in corporate governance levels on the relationship of the industrial policies and the technology innovation.Thus the theoretical and empirical evidences of the technology innovation in China’s manufacturing industry are provided in both macro and micro perspectives.Firstly,the literature on the relationships between industrial policies and technology innovation,corporate governance and technology innovation is comprehensively summarized and reviewed.It is concluded that there exist different research conclusions on these relationships and the possible reasons for the phenomena lie in that: First,it may not be a simple linear correlation between macro industrial policy and micro innovation subjects-enterprises,which means that there are mediating factors,for example,the structure and complexity of products,market and technology,the different levels of corporate governance,etc.These factors lead to the different effects of the same or similar policies.Meanwhile,corporate governance is the synthesis of multiple dimensions.And the research of corporate governance level should take various related factors into consideration comprehensively otherwise it is not able to reveal the overall relationships between corporate governance and innovation.The existing research lacks a unified theoretical analysis framework,making it impossible to determine the decisive factors affecting innovation.Based on the analysis above,a theoretical framework of the relationships between industrial policies,corporate governance and technology innovation is proposed.First,according to the characteristics of manufacturing that is of high risk,high input,externality,cyclicity and overall coordination,based on the spillover effect and signaling effect of research and development,the positive effect of industrial policy on technology innovation is illustrated.In view of the asymmetric information theory,agency theory,crowding-out effect theory as well as wave phenomenon,the theoretical mechanism of industrial policy restraining technological innovation is expounded.Considering the difference of corporate governance level,It is further implied that the same industrial policy can produce better innovation performance in enterprises with higher corporate governance level.Besides,this chapter also explains why the advancement of corporate governance can promote the technology innovation using the principal-agent theory,the theory of modern property ownership and entrepreneur theory as the theoretical ground.In addition,from the perspective of organizational legitimacy,it is proved that there is a significant positive interaction between technical complexity and corporate governance level.Lastly,the influence mechanism of corporate governance on the relationship between industrial policies and technology innovation is illustrated.In the empirical part,this paper first combs the development process and industrial policy changes of China’s manufacturing industry after the reform and opening up.It also analyzes the different roles of industrial policy in different stages of the development of China’s manufacturing industry,and gives an overall grasp of the historical context from imitation innovation to independent innovation.It comes to a conclusion that: China’s manufacturing industry still has some significant weaknesses in terms of resource endowment,industrial structure,product structure,profitability,regional coordination and core technology competitiveness.Furthermore,Through the comparative study of the industrial development practices of the United States,Germany,Japan and other developed countries,this paper summarizes the applicability of these international experiences to the innovative development of China’s manufacturing industry.In the part of empirical test,difference-in-differences model is established to investigate the impact of industrial policy changes on technology innovation during the "11th five-year plan" and "12th five-year plan" at first.And the Poisson regression model is constructed respectively to test the specific impact mechanism of industrial policies on enterprise innovation from two aspects of financial support and government subsidies that is further subdivided into government research subsidies and tax incentives.The empirical research reveals that the positive effect of industrial policy on technology innovation is significant in non-state-controlled enterprises and in enterprise above designated size,but not significant in state-controlled enterprises and small and medium-sized enterprises.The incentive effect of industrial policy is robust on patent application,while is not robust on patent authorization.The incentive industrial policy encourages enterprises’ patent application more.Government subsidies and financial support have a significant positive effect on enterprise innovation performance,no matter what kind of holding types the enterprise is.Tax preference can improve the technology innovation of enterprises.Compared with state-controlled enterprises,tax preference plays a more obvious role in non-state-controlled enterprises.Secondly,in order to comprehensively and accurately describe the level of corporate governance,the corporate governance index is constructed referring to the existing literatures.The empirical results confirm that the improvement of governance level of listed manufacturing companies in China plays a significant role in promoting technology innovation.Furthermore,the technical complexity index is constructed with the using degree of intermediate product and it is proved that compared with industries with low technical complexity,the improvement of corporate governance level plays a more significant role in innovation in industries with high technical complexity.And after controlling the nature of the shareholders,the scale of the enterprise and the marketization level,the significant positive relationship between corporate governance and technological innovation remains true.On this basis,corporate governance related variables are substituted into the role model of industrial policy on technology innovation to explore how the differences in corporate governance can influence the relationship between industrial policy and technology innovation.It is concluded that the higher the corporate governance level within the enterprise,the better effects the industrial policies can create on technology innovation,which is especially significant in state-controlled enterprises.The positive interaction between government subsidies and corporate governance is significant and robust,which is more significant in non-state-controlled enterprises.And there is a positive interaction between corporate governance and scientific research subsidies,but the interaction between corporate governance and tax incentives is not significant.After the distinction of holding types,financial support is significantly positively correlated with corporate governance and corporate governance level and industrial policy can form a positive interaction mechanism.In the last chapter of this paper,practical suggestions for the upgrade of China’s manufacturing industry are proposed from two perspectives: macro industrial policies and micro corporate governance.At the policy level,to encourage and support innovation in manufacturing,the Chinese government should transform government functions and improve industrial policies.It is supposed to establish innovation systems and foster an innovation environment,to develop strategic emerging industries and standardize regional distribution,to cultivate innovative talents and provide financial support,and to adjust the areas and priorities of industrial policies.Meanwhile,in the process of policy making,the government should take into account of the technical complexity of the industry in which the listed companies are located and the differences in the companies’ internal governance structures,so as to create healthy external conditions for corporate governance.Besides,industrial policies are expected to respect the laws of the market and reduce the direct administrative intervention.And it will be welcomed if the government can conduct effective preferential policies for non-state-controlled enterprises and give strong support to improve the governance level of state-controlled enterprises,as well as promoting the establishment of a perfect labor market.To achieve independent innovation,Chinese manufacturing enterprises should not only focus on R&D activities,but also focus on improving corporate governance,and the specific measures include that: first,improve corporate governance level and establish effective internal institutions.Second,give a full play to the important role of institutional investors.Third,build a stakeholder governance mechanism.Fourth,improve the equity structure and fifth,improve the structure of board.