Transformation Of Government-business Relations And Chinese Enterprises Innovation

Governments at all levels are deeply involved in the process of economic development and reform in China since reform and opening-up.The market-oriented reform led by the government coupled with the transition system of administrative and fiscal decentralization deduces the complicated government-business relation between local governments and enterprises,and between officials and entrepreneurs.This government-business relation formed in China's particular system has effectively promoted the rapid development of China's economy and achieved China's “economic miracle” to some extent.However,the informal business relationship based on individual level officials and entrepreneurs and rent-seeking corruption has distorted the market environment of fair competition,reduced the resource allocation efficiency,affected the sustainable development of the economy.Therefore,the boundary of the interaction between government and business in China needs to be further clarified and the relationship between government and business needs to be remade in the crucial period of realizing the Chinese dream.In the process of deepening reform and development,China's government-business relations are also constantly changing and developing.On one hand,with the institutional change of high-pressure anti-corruption,the informal relationship between government and business,such as the part-time work of officials in enterprises,the dual role of senior executives in SOEs,and the official and business alliance based on rent-seeking relationship,are being broken down and standardized.On the other hand,the central and local governments have introduced policy measures to improve the business environment,and a new type of governmentbusiness relation based on institutionalization and legalization is taking shape.The basic characteristic of China's economic development in the new era is the transition from high-speed growth stage to high-quality development stage.Promoting high-quality development has become an inevitable requirement for economic development.The technological innovation ability of micro-enterprises is an important embodiment of high-quality economic development.How does the institutional change of the relationship between government and business affect enterprise innovation? What kind of government-business relation can promote China's high-quality development? How to handle the relationship between government and enterprises in the new stage of economic development? Using the quasi natural experiments provided by the high-pressure anti-corruption measures since the 18 th national congress of the communist party of China which brings the institutional changes in China's government-business relations,this paper expounds the influence of breaking and standardizing informal government-business relations on enterprise innovation and clarify the role path and internal mechanism of the formal government-business relation to promote enterprise innovation.To test whether breaking and standardizing informal government-business relations can promote the enterprise innovation,this paper use the No.18 Document of the organizing department of CCCPC as a quasi natural experiment and finds that the closure of “revolving door of politics and business” improves the innovation incentive of non-SOEs,but the resource constraint effect worsens financing constraintshas they are facing and the success of private enterprises in innovation transformation depends on the business environment in which they operate.Using the inspections of 55 stateowned key enterprises as a quasi natural experiment,this paper finds that the inspection can exert the function of external supervision and restrain the tendency of SOE leaders,who are both official and professional manager,to pursue enterprise's size and shortterm returns while ignoring enterprise's innovation efficiency.What's more,this paper finds that crackdown on political corruptions resulted in the end of the rent-seeking relationship of the privileged enterprises associated with it obviously promoted the innovation activities of other companies in the same region,that means the breakdown of the “official and business alliance” has a positive externality effect.Whether the new political and business relations of “Qin” and “Qing” can promote enterprise innovation? Based on the background of the time when policies and measures have been issued all over the country,focusing on improving the business environment and building the new type of government-business relations,this paper attempts to open the “black box” that how this new government-business relation affecting enterprise innovation.The results show that a healthier political and business relationship can significantly improve the innovation input and output of enterprises,and the innovation promotion effect of the new political and business relationship is more significant for private enterprises.Analyzing the mechanism by which the new political and business relations promote enterprise innovation,this paper finds that the new political and business relations play an important role in stimulating enterprise innovation through resource effect,efficiency effect and value effect.First,a healthier political and business relationship can ease the constraints on innovation financing;secondly,a healthier political and business relationship can improve the allocation efficiency of R&D;thirdly,a healthier political and business relationship can enhance the value of enterprise innovation.This shows that building a healthy political and business relationship on the basis of institutionalization and legalization is an important way to release the dividends of enterprise innovation,to improve the endogenous power of economic growth and to realize the high-quality development of China's economy.The essence of the relationship between government and business is the relationship between government and market.This article suggests that in innovationdriven development,the issue that the market plays a decisive role in resource allocation and better plays the role of the government is also of core importance.China urgently needs to change the national innovation system,so that the market can truly become the leading force in the allocation of innovative resources and the government can play a better role.Since the reform and opening up,the group of officials has gone deep into enterprises through various forms and established informal political and business relations with enterprises.The rent-seeking problem caused by this informal relationship between government and business is the most important cause of “government failure” in the innovation process of enterprises.Breaking the informal relationship between government and business helps correct “government failure”,while building a new type of relationship helps to correct the “market failure” faced by enterprises in the process of innovation.The transformation of the relationship between government and business can coordinate the relationship between government and market.Under the joint action of “efficient market and effective government”,the innovation vitality of Chinese enterprises will be unleashed and the quality of China's economic development will be improved.This paper demonstrates the active role of the government in the process of promoting enterprise innovation and provides solutions to the prominent problems that the quality and efficiency of development are not high enough and the capability of independent innovation is not strong enough that China's economy has been exposed to at the present stage.