The Impact Of Customer Stability On Firm R&D Investment From The Perspective Of Financial Support

The transformation strategy from “made in China” to “created in China” is a way for manufacturing industry in China to enhance its overall competitiveness.“Made in China 2025”clearly states that one of the basic principles to achieve this goal is “innovation-driven”.Therefore,the innovation investment of manufacturing enterprises is the key to the transformation.Supply chain management,which aims to enhance the competitiveness of enterprises,is a hot field in recent years.Customers are important stakeholders as they have significant influence on business performance,risks,financing capacity,and investment decision.However,there is no consistent conclusion about the impact of customers on enterprise innovation.On the one hand,current research mostly uses customer concentration as a measure which does not distinguish the characteristics of cooperation between enterprises and customers.On the other hand,it is not comprehensive to only examine the impact of customers on R&D investment because enterprise investment and financing also have an impact.Therefore,combining customer concentration,customer fluctuations and customer variation helps us to better understand the management role of supply chain management,and helps enterprises to effectively invest on innovation.This paper analyzes the impact of customer stability on R&D investment and its internal mechanism using the observation data of China's listed manufacturing companies from 2011 to 2018 as a research sample.In the empirical analysis,the research first analyzes the impact of customer stability on R&D investment and distinguish differences among industries.Then,the research analyzes the intermediary effect of financing structure and cash holdings between customer stability and R&D investment and the adjustment effect of factor intensity respectively.Finally,this research discusses the intermediary role of manager's overconfidence between customer stability and R&D investment and the adjustment effect of factor intensity from the perspective of decision-making.At the same time,the differences existing before and after the promulgation of the “Made in China 2025” action plan were analyzed by enterprises and the robustness was tested.The main conclusions are as follows:(1)Customer concentration,positive customer fluctuation and enterprise R&D investment have a positive relationship.But negative customer fluctuations and customer variation reduce the R&D investment.The R&D investment of non-technology-intensive enterprises are more sensitive to customer stability after the "Made in China 2025" policy.Further research has found that positive customer volatility helps to increase the positive impact of R&D investments and innovation output,but negative customer volatility or customer variation has a negative impact.(2)Customer concentration and customer positive fluctuation are significantly positively correlated with external financing,while negative fluctuation and customer variation are negatively correlated with external financing.The external financing has intermediary effect between customer stability and R&D investment.Further research shows that equity financing plays the largest intermediary effect on customer concentration and enterprise R&D investment,followed by commercial credit.The bank loan has the least impact and shows concealing effect.(3)Customer concentration,customer fluctuations and customer variation increase the cash holdings level.Also,cash holding plays an intermediary role between customer concentration and customer positive fluctuations and plays a hidden role between customer negative volatility and customer changes.Further research found that direct financial support significantly improves the positive correlation between customer concentration and R&D investment.But the positive effect of tax incentives is only significant in enterprises with high cash holding level.(4)Customer concentration,customer positive fluctuations and customer variation show a significant positive correlation with managerial overconfidence.Managerial over-confidence plays an intermediary role among customer concentration and plays a hidden role between customer fluctuation and R&D investment.Further research has found that R&D investments contribute to increasing market value.This impact is exacerbated by customer concentration and is only evident among managerial over-confident.The conclusion shows that customer stability has a governance,direct and indirect effect on enterprise R&D investment.At the same time,this research has theoretical and practical significance for enterprises to understand “Made in China 2025”,and provides empirical evidence for enterprises to enhance their R&D investment and establish stable customer relation.