Competition And Decision Making Of Company Innovation

After Reform and Opening,capital formation increases too rapidly compared with the increase of the output in China's economy.While,technological progress which should have played a major role tends to decline in economic growth,and the technological competitiveness of our country also shows the tendency of decline.These phenomena are not conducive to the sustainable economic development.The construction of the modern economic system needs to realize the conversion of economic growth mode and the optimization and upgrading of the industrial structure.The key question needing to research at present is that how to change the main increase mode from extensive growth to intensive growth.Because of competition and innovation are two basic problems which need to be faced in the transition economy,and they are also the two main driving forces for the improvement of labor productivity.The article clarifies the relationship between competition and innovation,carries out innovation research from classical perspective,in order to find new impetus for the sustainable development of the China's economy.The research on the relationship between competition and innovation behavior has been attracting much attention in the academic circles.However,the research conclusions are controversial.The systematic study of competition and innovation begins with Schumpeter,who believes competition hinder innovation while the other research papers point out that competition foster innovation.The conclusions of relationship between competition and innovation in empirical research vary widely,including they are positive relationship,negative relationship and inverted “U” relationship.The different conclusions of the theoretical model may come from different hypothesis,while the different conclusions of the empirical research may come from different estimation method,different data sources or different selection of proxy variables for competition and innovation.The paper decomposes the competition measurement into three basic indexes(product substitutability,market size and market entry costs),and also points out the influence mechanism of these three basic indexes on enterprise product innovation and process innovation selection.Furthermore,the thesis checks out the influence of competitive pressure on the selection of innovation behavior of enterprises under the Chinese background using state-owned and large-scale non state-ownedenterprises data of the Chinese industrial enterprises database from 2004 to 2007.The thesis includes 7 chapters.Chapter 1 introduces the research background and significance,identifies research objectives,specifies the key definitions,then summarizes innovations and shortcomings of the research.Chapter 2 sorts out published literates about competition and innovation from the perspective of industrial economics,in order that let's know the location of the content researched clearly,finally,makes comment on the relationship between competition and innovation of domestic research opinions.Chapter 3 proposes the theoretical model of this paper,which describes product substitutability,market size and market entry costs affecting the enterprise product innovation and process innovation referred the Boone's idea(2000)of the research and development motivation for product innovation and process innovation and also referred Vives' s idea(2008)of the relationship between competitive pressure and innovation.Chapter 4 analyzes status and characteristics of manufacturing industry and innovation,so that let's have a clear understanding of the innovation ability of manufacturing enterprises of China.Chapter 5 and chapter 6 are the empirical parts of the thesis.One of the key and difficult points in this thesis is the measurement of competition.The chapter 5 is mainly about the method of measure competition,measures the three indexes of competition by using the micro data of enterprises from China's industrial enterprises database.The estimation of product substitutability mainly uses proxy variables calculated by Dorfman-Stein's conditional estimation for residuals.The scale of the market size includes both the size of the international market and the local market,the market entry costs include the establish costs for enterprises entry a new market,the administrative entry barrier cost is caused by the distortions of administrative barriers.This chapter points out how to choose these three indexes for detailed analysis and estimation.Chapter 6 takes an empirical test to check out the relationship between competition and innovation by using China's industrial enterprises database,verifies the theoretical hypothesis proposed in the chapter 4.The Probit model is used to analyze the impact of competition on enterprise innovation selection because of the data characteristics of China's industrial enterprise database and specific research questions.The empirical test mainly considers the following aspects:(1)Whether there are any difference in the influence of competitionto product innovation and process innovation? The results show that competition influence is not consistent on product innovation and process innovation.If we improve product substitutability and market entry costs,the process innovation intention of the enterprise will also increases while the product innovation intention decreases.The expansion of the market will both raises the willingness of enterprises to innovate their product innovation and process innovation.(2)Considering China's long-term artificial distortion of market resources and the effect of administrative entry barriers when we regress sub-samples according to the degree of administrative barriers.It is found that competition has a significant influence on the enterprise innovation behavior in the free competitive markets,while it has little influence on high administrative barriers markets.(3)Innovation is also reflected in enterprise capabilities.This paper takes the enterprise capability into consideration,carries on the sub-sample regression,and finds that the competitive pressure has a more significant effect on the higher efficient enterprises and the lower efficient enterprises.Chapter 7discusses relevant conclusions,which include the government balance product innovation and process innovation in policy formulation and companies choose innovation to provide policy advice in competition.Finally,the paper analyzes the shortcomings of the article and the possible future research directions in detail.The first innovation of this dissertation is the method of measure competition by using the three indexes which are product substitutability,market size and market entry costs.The three indexes can reflect the true competition extent more accurately than the comprehensive competition measures.That is the reason we choose this three indexes.Another innovation is that try to test the selection of competition and innovation under the Chinese background.Based on the theoretical model,the paper makes a multi-angle measurement and analysis of competition by using large sample panel data of Chinese enterprises.The paper explains the differences between competition and innovation of China from a completely new angle,provides new impetus for the improvement of our enterprise innovation.