Government's Innovation Orientation,Market Segmentation And Enterprise Innovation

For a long time,under the "promotion championship" of local officials and the fiscal decentralization system,Chinese local governments have regarded economic growth as their most important decision-making target,forming a deep-rooted "economic growth orientation." In recent years,with the increasing importance of innovation and the central government's continuous emphasis on technological innovation," innovation orientation" has also become an important orientation in local governments' decision-making,and local governments' emphasis on innovation has begun to increase.However,from a realistic point of view,for local governments,both the cultivation of innovation orientation and the actual effect of innovation orientation on enterprise innovation are faced with many doubts.For example,can local governments really improve their innovation orientation in the context of deep-rooted growth orientation? What influence mechanism does the local government's innovation orientation have on regional development and enterprise innovation activities? Can its innovation support really promote the improvement of enterprise innovation level? These issues are important,because they are not only related to whether the innovation level of Chinese enterprises can be effectively improved,but also related to whether the innovation-driven development strategy can be implemented smoothly.To answer these questions,it is necessary to examine the influence mechanism of local government's innovation orientation,and to clarify the relationship between the local government's growth orientation and innovation orientation.After reviewing the relevant studies,this paper finds that the existing studies on the orientation of local government rarely involve the strategic interaction and mutual influence between local governments in different regions.However,market segmentation,as a direct manifestation of the strategic interaction between local governments,may be an important factor affecting the relationship between local government orientation and corporate innovation.To this end,this article discusses these issues from the perspective of market segmentation,and provides empirical evidence for theoretical propositions based on the data of Chinese listed companies from 2007 to 2017 and regional data.Specifically,this article first analyzes the influence mechanism of government innovation orientation on enterprise innovation by constructing a theoretical model,and focuses on the mediating and moderating effects of market segmentation.After that,this article further analyzes the relationship between local government's growth orientation and innovation orientation,and proposes a path for local governments to balance growth and innovation from the perspective of market segmentation.The main findings of this article are as follows: First,the innovation orientation of government can eliminate regional market barriers,promote market integration,and further promote enterprise innovation.Specifically,this paper constructs and solves a three-stage game model involving local governments and enterprises,and conducts empirical tests based on data at the enterprise and regional levels.The following findings are obtained:First,when the local government's orientation shifts from short-term economic growth to innovation,the improvement of innovation orientation will prompt local governments to abandon regional market barriers,thereby reducing the degree of inter-regional market segmentation.Second,market segmentation weakens the role of innovation in promoting enterprise size and market performance,so reducing market segmentation and promoting market integration are conducive to improving enterprises' innovation motivation and level.Third,comprehensive theoretical analysis and empirical test,innovation orientation of local governments can significantly promote enterprise innovation level,and its internal mechanism has both direct impact and market integration as an important mediating effect.In the empirical research in this chapter,innovation orientation has a significant role in promoting enterprise innovation input,innovation output and innovation quality level,and its mediating effect in promoting market integration and thereby promoting enterprise innovation is very obvious.The internal mechanism of the above theoretical propositions is that although market segmentation can ensure the expansion of local enterprises,which is conducive to the realization of the growth orientation of local governments,it has caused the lack of innovation motivation of enterprises.When the innovation orientation in the local government's target is improved,in order to avoid the inhibition of market segmentation on innovation,they will choose to actively lower local market barriers and promote the process of market integration,which further promotes innovation of enterprises.This also shows that local government's innovation orientation not only directly promotes enterprise innovation,but also its mechanism of promoting regional market integration is also worthy of attention.In addition,this paper also inspects the social welfare situation through theoretical models and numerical simulations,and finds that the improvement of local government's innovation orientation can promote the improvement of total social welfare,which provides a theoretical basis for cultivating local government's innovation orientation.Second,market segmentation exerts a moderating effect,weakening the promotion effect of government innovation orientation and government innovation support on enterprise innovation.Based on theoretical analysis and empirical testing,this paper finds that at the regional level,market segmentation weakens the effect of government innovation orientation on regional innovation input,innovation output and innovation quality.At the enterprise level,government innovation support,which represented by innovation subsidy,has a significant promoting effect on enterprise innovation input,innovation output and innovation quality,but market segmentation significantly weakens these promoting effects of innovation support on enterprise innovation.These findings indicate that one of the important reasons why China's innovation support policies often fail to achieve the expected results is that the market segmentation and local protectionism between regions have not been fundamentally curbed.In addition,further research in this article shows that corporate tax relief can also promote enterprise innovation,and its role in promoting enterprise innovation has not been weakened by market segmentation.This means that for regions with severe market segmentation and industries where local protection is prevalent,their innovation support should be based on tax reduction and exemption,and direct innovation fund subsidies should be reduced.Thirdly,market segmentation is an important reason why local governments' target cannot balance growth and innovation.Aiming at the problems of deep-rooted economic growth orientation of local governments and their innovation support motivation are insufficient,this paper is based on theoretical analysis and empirical testing to further analysis the relationship between the two major orientations of local governments.After the derivation of the game model,this article finds that market segmentation has played an important role in the relationship between growth orientation and innovation orientation.If market segmentation is severe,local governments will not be able to take into account the two orientation of growth and innovation.Their inherent growth orientation will inhibit the improvement of innovation orientation,and thus inhibit the level of enterprise innovation;if the level of market integration is high,then the growth orientation will promote the improvement of the innovation orientation,thereby benefiting the level of enterprise innovation.After that,this paper uses data based on the regional and enterprise levels to test the above theoretical propositions.This finding shows that the promotion of market integration process is conducive to the local government to truly establish the concept of "innovation-driven development" and conducive to the simultaneous promotion and coordination of economic growth and improvement of innovation.The research conclusions of the above aspects in this article complement and confirm each other,and illustrate the important effect of market segmentation,which plays a important role between the transformation of government orientation and enterprise innovation.The findings of the first two aspects indicate that in the mechanism of influence of local government's innovation orientation on enterprise innovation,market segmentation plays an important mediating effect and moderating effect.The conclusion of the last aspect is further in-depth,examining how to make local governments compatible with growth and innovation,and truly establish the governing concept of innovation-driven development.These aspects show the important role of reducing market segmentation between regions and promoting market integration: Market integration is not only a driving factor for local governments to form the concept of innovation-driven development,but also,in turn,is affected by innovation orientation and plays an important role in the mechanism of promoting enterprise innovation.Finally,this article puts forward corresponding suggestions to promote the integration of inter-regional market,adjust government orientation and promote enterprise innovation.Compared with previous studies,this article has the following innovations: First,the government objective function is set innovatively.This paper sets the government target as a choice between short-term economic growth and improvement of innovation level,which is quite in line with the realistic characteristics of China.Secondly,this paper gives a new explanation to the mechanism of market segmentation.This paper is not limited to the two existing explanations of "promotion championship" and fiscal decentralization,but finds that the government's neglect of innovation also contributes to the market segmentation between regions.Third,it has enriched relevant studies on the effect of government innovation support on enterprise innovation.Previous studies have found that the actual effect of government innovation support on enterprise innovation is affected by many internal and external factors.This paper further finds that market segmentation,as a regulating variable,can significantly influence the effect of government innovation support on enterprise innovation.Fourthly,the relationship between government's growth target and innovation target is discussed.In previous studies,the importance local governments attach to growth and innovation is often regarded as the opposite relationship.This paper finds that under the condition of market integration,local governments can take both growth and innovation into consideration,thus providing a theoretical basis for establishing the concept of innovation-driven development.