The Research On Enterprise Innovation From The Perspective Of Government Administration Reform

This paper examines whether government administrative flattening reform and cross-regional transfer of officials shape the R&D and innovation activities of firms in their jurisdictions based on C hina’s local government administrative reform and official exchange system.To examine this issue,this paper first reviews the relevant literature,and on this basis,the external institutional factors of enterprise R&D innovation-the government bureaucratic structure and its derivative government decentralizatio n reform,and the career promotion pressure of government officials are endogenized into the enterprise R&D decision model,in an attempt to explain the current R&D inefficiency of Chinese enterprises and the widespread practice of The institutional roots of strategic innovation.The results of this paper show that the R&D and innovation activities of Chinese enterprises in transition are not internal decision-making actions,but are imprinted on the external institutional environment where they operate,thus deepening the political economy logic of the R&D and innovation activities of C hinese enterprises in economic transition.The main findings of this paper are set out below.First,reducing the administrative level of local governments improves the quality of patent applications and stimulates R&D innovation by focusing R&D activities more on the main business of the company.The better the regional governance environment and the higher the degree of marketization,the more significant the positive effect of reducing the local government hierarchy,which implies that a certain degree of decentralization helps companies in the region to engage in high-quality R&D and innovation activities.After distinguishing between different models of government administrative structure reform,it is found that the mechanism of stimulating R&D innovation in the directly administered counties lies in the fact that government administrative structure reform reduces rent-seeking and the derived institutional transaction cost s of enterprises,makes the administrative execution of the grassroots government in the directly administered counties more efficient,improves the efficiency of government subsidy allocation,and creates a favorable external innovation environment,thus stimulating enterprises in the jurisdiction to engage in more R&D innovation behaviors.This finding has important implications for how to stimulate enterprises’ R&D and innovation dynamics through systematic institutional structural reforms and modernize government governance capacity.Second,official promotion tournaments give local governments an incentive to interfere with firms in their jurisdictions,which in turn increases the probability of government-enterprise collusion.To this end,this paper examines the relationship between official relocation and corporate R&D innovation based on the institutional design of official relocation.This paper shows that the system of official relocation reinforces the short-sighted behavior of local officials and is not conducive to stimulating R&D and innovation activities in the jurisdictions;the number of patent applications filed and granted by enterprises in jurisdictions where officials are relocated is significantly lower compared with those promoted loca lly;after distinguishing the quality of patent applications,this paper finds that the number of high-quality patent applications filed and granted by enterprises in jurisdictions where officials are relocated is significantly lower,and this This negative effect is enhanced in the first three years of the officials’ relocation,thus confirming the inhibitory effect of the relocation system on R&D innovation in Chinese enterprises.On this basis,this paper further analyzes the mechanism of the effect of officials’ relocation exchange on impeding R&D innovation of enterprises in the jurisdiction,and finds that the officials’ relocation exchange system leads to policy discontinuity and encourages over-investment to affect enterprises’ R&D innovation.That is,the change of officials under the heterogeneous exchange system brings about more unstable innovation policies,which eventually hinders the R&D innovation activities of enterprises.Third,regarding government administrative reform,this paper also further examines how SOEs’ pyramidal decentralization institutional arrangements shape firms’ R&D and innovation strategies.It is found that the pyramid hierarchy of local SO Es is significantly and positively related to firms’ R&D innovation.The decentralization arrangement also leads to a closer relationship between the patents applied for by firms and their main business,which implies that the direction of firms’ R&D innovation is more focused on the firm’s core business.It indicates that government dece ntralization helps to increase firms’ R&D and innovation activities.Further research finds that the positive effect of government decentralization reform on firms’ R&D and innovation is weaker in regions with a higher degree of marketization and stronger for politically connected firms,and further finds that government decentralization can counteract local government intervention,increase the cost of intervention,and trigger firms to hire professional executive teams,which enhances firms’ Overall R&D innovation capacity.