A Study On Confucian Culture And Corporate Innovation

Innovation is the soul of human civilization and progress,as well as the inexhaustible source of a country's prosperity.According to the "Outline of the National Medium-and Long-Term Science and Technology Development Plan(2006~2020)",it is China's established strategic goals to improve the capability of independent innovation and build an innovation-oriented country.The report of the 19 th National Congress of the Communist Party of China further made a major strategic plan of "promoting high-quality development",pointing out that "China's economy has shifted from a stage of high-speed growth to a stage of high-quality development".However,the construction of innovative countries and the realization of high-quality development goals need not only top-level design but also micro-foundation.Enterprises are the most important market supplier and the main force to promote innovation,and they are the main force driving innovation and creation.Therefore,only by stimulating the innovation vitality of enterprises and improving the efficiency of technological innovation of enterprises can activate the micro-foundation of high-quality development.Existing studies have investigated the determinants of corporate innovation from the perspectives of intellectual property protection,financing constraints,corporate governance,government subsidies and industrial policies,which have yielded many valuable achievements.However,most of them base on the perspective of contract economics to examine the macro-institutional constraints or micro-dynamic mechanism,but ignore the potential role of implicit value norms such as social culture in decision-making preferences and strategic choices of innovative subjects.Culture be unconsciously integrated into the decision process by embedding the cognition and thinking mode of executives,and is ultimately reflected in the choice of business strategy and the consequences of business.In Chinese society,Confucian culture is the most extensive and far-reaching informal institutional factor.However,for a long time,there have always been serious differences and controversies about whether Confucian culture promotes or inhibits innovation.Both sides lack rigorous theoretical analysis and empirical evidence.So,what is the impact of Confucian traditional culture on the innovation behavior of contemporary enterprises? What is the value and function of Confucian traditional culture in building an innovation-oriented country and achieving the strategic goal of high-quality development? Hence,this paper break through the traditional theoretical framework of institutions and contracts,comprehensively using the methods of classical interpretation,theoretical analysis and empirical test,and systematically investigates the impact of Confucianism on corporate innovation and its transmission mechanism from the perspective of informal institutions.On this basis,this paper forms a dual analysis paradigm and theoretical framework of corporate innovation decision-making from both formal and informal institutional perspectives,and explores the heterogeneity effect of Confucianism on corporate innovation under different institutional and organizational contexts.Further,this paper tests the effect of Confucianism on corporate innovation efficiency and business performance.Specifically,the main contents and innovations of this paper are as follows:First,breaking through the traditional theoretical framework of institutions and contracts,this paper reveals the promoting effect of Confucianism on corporate innovation from the perspective of cognitive imprinting and ethical restraint,and further demonstrates three specific ways,including by alleviating agency conflicts,improving the level of human capital investment and reducing the risk of patent infringement.Previous studies mainly have investigated the macro-institutional constraints or micro-incentive mechanisms that affect corporate innovation such as intellectual property protection,financing constraints,corporate governance and government subsidies.Different from them,this paper breaks through the traditional institutional and contractual framework,constructs the theoretical analysis framework of "Confucian culture,implicit norms and corporate innovation" from the perspective of informal institutions,and elaborates the effect and internal mechanism of Confucianism on corporate innovation from the two dimensions of promotion effect and shackle effect.Empirical results show that Confucianism is significantly positively associated with corporate patent output,implying that Confucian culture has a significant "promoting effect" on corporate innovation.Further channel analysis shows that Confucianism affects corporate innovation mainly by alleviating corporate agency conflict,improving the level of human capital investment,and reducing the risk of patent infringement.This means that the cognitive brand of "respecting knowledge and valuing education" preserved under the influence of Confucianism for a long time is conducive to shaping the talent view of corporate executives,improving the level of human capital investment,and thus providing solid talent reserve and intellectual support for technological innovation.Meanwhile,The implicit ethical constraints of Confucianism also helps to alleviate internal agency conflicts and reduce the risk of external patent infringement,thus creating a good institutional environment for innovation.This not only deepens the understanding of the cultural soil and its power logic on which innovation depends,but also expands the theoretical cognition of the economic consequences of Confucianism at the firm level and correct some scholars' negative cognitive bias.Meanwhile,it also provides the necessary theoretical basis and policy reference for giving full play to the positive role of Chinese excellent traditional culture in achievinging innovation-driven and high-quality development goals.Second,integrating formal system with informal system,this paper explores the interactive effects of two different restraining forces of Confucian implicit norms and formal institutional environment on corporate innovation and finds that the effect of Confucianism on innovation is more prominent for private enterprises and firms located in regions with weak legal system and foreign culture shock.Most of the existing studies on corporate innovation ignore the impact of the interaction between formal and informal institutions.According to the relevant theories of new institutional economics,formal and informal institutions are two important components of the institutional system,both of which have an important impact on individual and organizational behaviors.Based on the special institutional context of China's law and property rights and the international background of multicultural integration and collision under the wave of globalization,this paper forms a dual analysis paradigm and theoretical framework of corporate innovation decision-making from both formal and informal institutional perspectives.Then examining the moderating effect of legal system environment,property right nature and foreign cultural shock on the relationship between Confucianism and corporate innovation.The results show that the positive effect of Confucianism on corporate innovation is more prominent for firms in areas with poorer legal system,implying that there is a mutual substitution relationship between the Confucianism of informal system and the legal environment of formal system in promoting corporate innovation.Further,compared with state-owned enterprises,the positive effect of Confucianism on corporate innovation is more obvious for private enterprises.In addition,foreign culture shock weakens the impact of Confucianism on corporate innovation.This not only deepens the understanding of the interaction of the impact formal institutions and traditional cultures on innovation in emerging market countries,but also provides a real scene for a comprehensive understanding of the contemporary innovative value of Confucianism.Third,embedding the organizational context into the analytical framework of "Confucian culture and corporate innovation",this paper investigates the heterogeneity effect of Confucianism on corporate innovation under different firms' characteristics and finds that the impact of Confucianism on innovation is weaker when firms face greater performance feedback pressure and market competition threat.Corporate innovation activities are not only constrained by external institutional and cultural factors,but also by internal organizational context.According to enterprise behavior theory,prospect theory and industrial organization theory,when firms faced with serious performance feedback pressure and market competition threat,managers may be more proactive in breaking through the existing system and cultural framework to stimulate the motivation of strategic change or risk innovation.Therefore,this paper further integrates the organizational situation into the analytical framework,and examines the moderating effect of performance feedback pressure and market competition threat on the relationship between Confucianism and corporate innovation.The results show that the greater the expectation gap and product market competition faced by enterprises,the weaker the influence of Confucianism on corporate innovation,suggesting that the performance feedback pressure and market competition threat weakens the influence of Confucianism on corporate innovation.Moreover,when a firm has many redundant resources,the weakening effects are more obvious.This not only helps to comprehensively understand the innovation effect of Confucianism and its marginal conditions and but also deepens the theoretical understanding of the determinants of corporate innovation.Fourth,around the logical chain of "R&D input output—results transformation",this paper comprehensively examines the impact of Confucianism on innovation(input-output)efficiency and business performance and finds that Confucianism can significantly improve corporate innovation efficiency and corporate performance through innovation channels.The complete innovation activities include R&D input,innovation output and achievement transformation.However,most of the previous literature only explores a stage of corporate innovation from a single dimension of R&D input or patent output,which is difficult to reflect the whole picture of innovation activities.Different from them,this paper comprehensively investigates the influence of Confucianism on innovation efficiency and the performance promotion function of innovation,and examines the relationship among Confucianism,corporate innovation and business performance by using the intermediary effect model.The results show that the stronger the influence of Confucianism,the higher the innovation efficiency;and the stronger the influence of Confucianism,the greater the effect of patent output on the improvement of future business performance,indicating that Confucianism can significantly improve the transformation efficiency of innovation achievements and enhance the marginal contribution of patented technology to business performance.Further mediating effect test suggests that Confucianism can ultimately improve corporate performance,and partly achieved through innovative channels.This not only deepens the understanding of the whole process of innovation,but also broadens the research perspective of corporate innovation theme,and provides some enlightenment and policy reference for alleviating the "high input and low output" and inefficient transformation of achievements in the field of technological innovation in China.Overall,this study has important theoretical values and practical significances.In theory,this paper breaks through the theoretical framework of traditional company and institution,and systematically examines the influence and mechanism of Confucian traditional culture and its implicit value norms on contemporary enterprise innovation behavior from the perspective of informal institution.This deepens the understanding of the cultural soil and its power logic on which innovation depends and enriches the research literature on the theme of corporate innovation.Meanwhile,it also expands the theoretical cognition of the modern commercial value of Confucian culture at the firm level and contributes empirical evidence from the oriental culture to the international literature on "culture and finance".In practice,this study is the first to theoretiocally explain and provide empirical evidence for Confucianism's positive effect on corporate innovation.This correct some scholars' negative cognitive bias and provides the necessary theoretical basis and policy reference for giving full play to the positive role of Chinese excellent traditional culture in building an innovation-oriented country and achieving the strategic goal of high-quality development.