The Governance Of Major Government Customers On Corporate Externalities And Its Efficiency

The relationship between government and market is not only an important topic in economic research,but also the core issue of China's economic system reform.In the market economy,the government not only can act as the regulator of corporates,managing and supervising the corporates' behavior;it also can act as the customer of corporates,purchasing goods and services from them and providing public goods and services to the society.From the government's point of view,government procurement is an important policy tool for the government to act as a buyer and implement macro-economic regulation through economic trading activities.As an important part of public finance,government procurement is a useful way for government to optimize resource allocation,and it is also a regulation method to guide the direction of industrial development and corporate behavior.Government procurement is playing an increasingly important role in governing externalities and market failures.Most of the existing researches of the relationship between government and corporate regard the government as a corporate regulator role,and explore how the government policies affect the behavior of corporates.They ignore that government can also act as a corporate customer.The research literature of supply chain has noticed the important influence of customers as one of the external stakeholders on corporate behavior,but mostly analyzes the economic consequences of customer concentration from the perspective of relational transactions between the corporates and their large customers.They have seldom differentiated customer types according to their nature,ignoring the heterogeneity and particularity of government customers and corporate customers.From the perspective of procurement policy,the research in the field of government procurement has paid attention to the governance effect of government procurement on external issues such as innovation and environmental pollution.They also discussed the effectiveness and efficiency of government procurement policies.However,they have not reached consistent conclusions and lacks empirical evidence of the impact on the firm-level because of the data limitation.Based on the realistic background of the relationship between government and corporate and the limitations of theoretical research,this paper focuses on the government as an important customer role,and explores the impact of large government customers on corporate behavior from firm-level.This paper studies the governance effects of major government customers from the dimensions of external governance and economic efficiency.This paper focuses on the special government customers and researches the two core issues of whether major government customers can manage corporate externalities and how major government customers affect corporate economic efficiency.Based on classical theories such as government-market relationship theory,externality theory,government procurement theory,supply chain management theory,and resource dependence theory,according to the China listed companies voluntarily disclosed information of top five customers from 2008 to 2017 identifying major government customers,the paper tests of the effects and internal mechanisms of major government customers on corporate innovation,environmental governance and total factor productivity controlling endogeneity.The research findings of this paper:(1)Major government customers can effectively promote corporate innovation,which can promote companies' R&D investment and patent quality.This promotion is more significant in high-tech industries,areas with high intellectual property protection and companies with severe financing constraints.There are great differences in incentive effect among distinct government customer types and the effect is more obvious in state agencies,central and provincial units.The mechanism analysis shows that major government customers can stimulate corporate innovation through signals in the product market and capital markets.(2)Major government customers can effectively promote corporate environmental governance and improve corporate environmental protection investment.The promoting role is more obvious in companies with higher environmental governance needs and higher financial constraints.Besides,there are great differences in the promoting impact among distinct government customer types and customers with administrative powers and financial support,as well as municipal and county-level units are more able to motivate companies to invest in environmental protection.Mechanism analysis shows that major government customers can improve companies' environmental responsibility and external financing ability,which not only enhances the willingness of environmental governance,but also enables companies to have more funds to invest in environmental governance activities.(3)Major government customers can effectively improve the total factor productivity of companies.With the gradual improvement of the total factor productivity,the marginal role of major government customers in improving total factor productivity is gradually reduced.This effect is more significant in technology-intensive,labor-intensive,capital-intensive industries,higher levels of product market competition industries,and companies with large technology distances.There are also obvious differences in the impact of different government customer types on total factor productivity.(4)Major government customers can influence companies' total factor productivity through externality governance.Companies can promote total factor productivity by increasing innovation investment,but the environmental governance investment partially inhibits the improvement of total factor productivity.In general,major government customers can promote externality governance while improving their economic efficiency,which plays a positive governance role.The paper analyzes the corporate externality governance effect and economic efficiency from the perspective of government as corporate customer.Firstly,based on the firm-level activities,the paper provides empirical evidence of the government's hands on the corporate externality governance and efficiency from the view of major government customers,which expands the role of government in the market.Secondly,it has deepened the research on the effects of special customers in supply chain,and paid attention to the unique characteristics of government customers.Besides,it also verifies the positive effect of major government customers on corporate externality governance as well as its efficiency and reveals the internal mechanism.Thirdly,this paper also enriches the research in the field of government procurement to some extent.It supplements the analysis of the governance effects of government procurement on companies and provides empirical support and policy advice for better government role.