Decision Right Allocation And Technical Innovation In Business Groups

In the context of deepening globalization and increasingly fierce competition in science and technology,Chinese enterprises urgently need an innovation-oriented resource-conserving development model.Since the Chinese government launched the "Made in China 2025" initiative in May 2015,innovation has been placed at the core of China's overall development.According to the Top 500 Innovation Index of China's A-share listed Companies released by Zijin Media Think Tank in 2018,more than 80 percent of the companies are group operated.As an important part of a national innovation system,the innovation capability of groups is related to the future trend of China's economic transformation.Although the innovation ability of Chinese enterprises has been improved under the national innovation development strategy,the current innovation development of Chinese business groups still faces many challenges.In the face of internal and external difficulties,how Chinese enterprise groups use effective means to overcome obstacles,seize opportunities,and realize the transformation from "made in China" to "created in China" is a major practical problem presented to the government,enterprises and academia.Therefore,it is of great significance to study the innovation behavior of groups.In 2019,Premier Li Keqiang stressed in the Report on the Work of the Government,"Scientific and technological innovation is essentially a creative activity of human beings.We should fully respect and trust our researchers,and give our innovation teams and leading talents greater rights to allocate human resources,financial resources and decision rights on technological routes." The report clearly puts forward that enterprise innovation should find the path from the perspective of decision right allocation.In management practice,the centralization of power can ensure the consistency of policies,reduce the overall loss caused by individual selfish behavior,and coordinate resources to improve the efficiency of resource management.Decentralization can mobilize the enthusiasm of lower organizations and ensure the effective combination of decision-making power and decision-making information.Mapped to innovation activities in groups,the empowerment of parent companies to subsidiaries is a trade-off between innovation incentives,innovation efficiency,innovation coordination and agency costs.What is the result of this trade-off?This paper takes China's A-share listed companies from 2007 to 2017 as research samples,and takes subsidiaries' financial investment rights and compensation management rights as proxy variables of decision-making rights,to analyze the relationship between intra-group decision rights allocation and technological innovation.It is found that decentralization is more beneficial to the technological innovation of subsidiaries.In the influence mechanism analysis,we find that decentralization promotes technological innovation by improving the subsidiaries' response speed to the market(decision efficiency).At the same time,the results show that although decentralization is beneficial to technological innovation,it also brings serious agency problems.Moreover,decentralization will harm the innovation of the parent company while improving the innovation of the subsidiary company,but overall,decentralization has a positive effect on the innovation of the group.Finally,we find that the impact of decentralization on technological innovation is different across industries: decentralization has a negative impact on innovation in industries that attach importance to basic research.In the era of rapid development of information technology,enterprises' decision-making,communication and governance methods have undergone earth-shaking changes.How does the change of information environment affect the relationship between power and innovation? Theoretically,information environment influences the relationship between power and innovation mainly through decentralization commitment,information rent,communication cost,supervision cost,coordination cost and information acquisition cost.However,each mechanism works in a different direction.Among them,information transparency weakens decentralization commitment and agent's information rent,and has a negative impact on innovation incentive.With the decrease of communication cost and information acquisition cost,information can be transmitted to the higher level or the lower level.With the reduction of coordination cost,the organization no longer needs centralized coordination at the top level.The lower the cost of oversight,the top level managers will less worry about delegating power.Therefore,we cannot know the influence of information environment on power allocation in advance.Therefore,this paper conducts an empirical test on the moderating effect of information environment,and finds that internal information transparency weakens the advantages of decentralization,while external information transparency enhances the advantages of decentralization.Moreover,information types are further divided into decision information and behavior information.Research shows that decision information transparency weakens the advantages of decentralization,while behavior information transparency enhances the advantages of decentralization.Compared with a single company,the main characteristic of group R?D is the complex resource relationship between parent company and subsidiary companies as well as between the group and the outside.In today's rapid development of science and technology,it is impossible for any enterprise to maintain long-term development by fighting alone,especially the business groups which is driven by research and development.They can build R?D partnerships within and outside the group to share resources and complement strengths.In this context,how should the allocation of decision rights match the cooperation of groups? In the last part of the empirical study,the paper examines the relationship between decentralization and the group's R?D cooperation.The results show that decentralization promotes the technological innovation of subsidiaries by improving the possibility of establishing R?D cooperation with other companies.Although decentralization has a positive impact on the R?D cooperation of subsidiaries,it is not suitable for the management of R?D cooperation of subsidiaries.In contrast,the advantages of coordination,game position and internal knowledge flow brought by centralization are more prominent.The specific structure of this paper is as follows:The first part is the introduction.It mainly proposes the research problems from the realistic level and summarizes the research significance of this paper.Then it defines the concepts of business group,decision right allocation and technology innovation.Then it introduces the research content and research method of this paper.Finally,the innovation and contribution of this paper are summarized.The second part is literature review.It is mainly divided into the literature related to decision right allocation,literature related to group innovation and the literature related to innovation.In the literature on decision right allocation,it is further divided into the definition and measurement of decision right allocation and the economic consequences of decision right allocation.In the literature of technological innovation,it is divided into the definition and measurement of technological innovation and the relationship between the allocation of decision rights and technological innovation.In the literature of group innovation,it mainly introduces the relationship between collectivized function and technological innovation,the relationship between subsidiary autonomy and technological innovation.Finally,it evaluates the literature on the relationship between subsidiary power and technological innovation,and summarizes the existing problems in the current research.The third part is the theoretical basis.Firstly,it introduces the background theories such as group management and control theory and R?D governance theory,and then analyzes the relationship between decision rights allocation and innovation from the perspectives of organization theory,property right partitioning theory,entrepreneurship theory and information power theory.Among them,the organization theory mainly analyzes the transaction cost,the organization incentive,the organization coordination.In the property right partitioning,the motivation of property division is introduced,then the theory of property division is combined with innovation.From the perspective of entrepreneurship,it mainly analyzes the heterogeneity of capital,the importance of decision right to entrepreneurship,the decision right allocation and entrepreneurship(innovation).From the perspective of information power,it analyzes the relationship between information and power,the characteristics of information innovation,and the logic of configuration between formal power and information power.The fourth part is the decentralization and technological innovation of business groups.First,it analyzes the relationship between decentralization and technology innovation from the perspectives of traditional organization theory and new theory,and then it carries on the empirical test to the above problems.Further,it discusses the mechanism of decentralization on technology innovation,the agency problem introduced by decentralization,the influence of decentralization on technological innovation of parent company,the industry differences in decentralization effect.Finally,corresponding suggestions are put forward according to the research conclusions.The fifth part is decentralization,information environment and technology innovation.This part mainly examines the moderating effect of information environment.Firstly,the information environment is divided into internal information environment and external information environment.It theoretically analyzes the influence mechanism and proposes the influence of different kinds of information environment(decision information and behavior information)on the relationship between decentralization and innovation.Then the above problems are empirically tested.Finally,corresponding suggestions are put forward according to the research conclusions.The sixth part is decentralization,R?D cooperation and technological innovation.This part examines the relationship between decentralization and R?D cooperation.Firstly,the relationship between decentralization and R?D cooperation is analyzed theoretically,and then,the research hypothesis is empirically tested.Finally,corresponding suggestions are put forward according to the research conclusions.The seventh part is the conclusions,the insufficiency and the future research direction.It summarizes the main research conclusion and the insufficiency of the whole paper,and looks forward to the future research.The innovations and contributions of this paper are mainly reflected in the following aspects:First of all,innovations and contributions in theory:(1)It take s interdisciplinary research on the relationship between decision power allocation and technological innovation.Existing management literature focuses on empirical research,but lacks relevant economic analysis;Economic literature focuses on theoretical analysis,but lacks empirical evidence.Management literature is mainly based on incentive theory,while economic literature is mainly based on information cost theory,agency theory and specific investment theory.The existing researches lack the integration of the two fields.This paper realizes the cross research of the two kinds of subjects,not only synthesizes the theoretical tools of the two kinds of literature,but also provides empirical evidence on this basis,which makes up the deficiency of the existing literature.(2)It constructs the theoretical analysis framework of the relationship between decision right allocsation and technical innovation.There is a lack of systematic research on the relationship between decision right allocation and technological innovation.Based on the traditional organization theory,combining the property right partitioning theory,entrepreneurship theory and information power theory,this paper constructs a complete theoretical basis for the relationship between decision right allocation and technological innovation in a multi-perspective and systematic way.(3)It deepens the research on the influence mechanism of decision right allocation on technical innovation.This paper makes an in-depth analysis of the relationship between decision right allocation and technological innovation from the perspective of information and R?D cooperation,which not only enriches the research on group management and control,but also enriches the literature on group innovation and R?D cooperation.Secondly,the innovations and contributions in the empirical study:(1)It enriches the empirical literature on the decision right allocation.Compared with a large number of theoretical literatures on decision right allocation,there are fewer empirical literatures on innovation from the perspective of decision right allocation.This paper will enrich the emerging empirical literatures on decision right allocation.(2)A series of new conclusions have been found empirically.Compared with previous literatures,this paper adds a mechanism test of the impact of decision decentralization on technological innovation,which proves that decision decentralization can improve decision efficiency and thus promote technological innovation.At the same time,this paper finds the applicable scenarios of decentralization and centralization for different types of innovation;In addition,this paper for the first time verifies the role of information environment in the relationship between decision rights allocation and innovation,and verifies the interaction between decision rights allocation and R?D cooperation.(3)Some proxy indicators were optimized.This paper uses "subsidiary financial investment right" to supplement the variable of decision rights allocation.In this paper,information types are divided into decision information and behavior information,and appropriate proxy variables are found for them.In addition,in terms of the characterization of R?D cooperation,this paper constructs the indicators of R?D cooperation respectively from the characteristics of patent and the characteristics of R?D data.Although the new indexes have some defects,this attempt has certain reference significance for future research.