Research On The Impact Of Fault-tolerance And Error-correction Mechanisms On The Investment Behavior Of State-owned Enterprises

As an important part of the socialist market economy with Chinese characteristics,state-owned enterprises have played a vital role in advancing economic and social development,promoting scientific and technological progress,ensuring and improving people’s livelihood.Since the reform and opening up,China has made remarkable achievements in the reform of state-owned enterprises by formulating a series of policies and measures,continuously optimizing the management and governance system of state-owned enterprises,and improving the market-oriented operation mechanism.However,owing to the specific characteristics of state-owned enterprises,the lack of vitality and low efficiency of state-owned enterprises have been controversial.In recent years,faced with increasingly improved performance appraisal system and strict accountability system for illegal operation and investment,senior executives of state-owned enterprises gradually hold a negative attitude of “doing more wrong,doing less wrong and not doing well” under the environment of low tolerance for investment risk and failure,thus reducing the enthusiasm of production and operation.With Chinese economic development entering the new normal and the reform of state-owned enterprises entering the deep water zone,it is particularly critical to further play the initiative and creativity of state-owned enterprises.Building fault-tolerance and error-correction mechanisms and creating a relaxed environment have become the important direction of state-owned enterprises’ reform at this stage.In January 2016,Xi Jinping,general secretary of the Communist Party of China,addressed the guiding principle of “three distinctions”,and made clear three specific contents of tolerance for mistakes.In the same year,China’s Government Work Report clearly stated that “fault-tolerance and error-correction mechanisms are established and improved”.Since then,China has continued to promote fault-tolerance and error-correction mechanisms in central enterprises and local state-owned enterprises,and issued corresponding policy documents for fault-tolerance and error-correction mechanisms for state-owned enterprises,for example,“Guiding Opinions on the Implementation of the Important Thought of‘Three Distinctions’ Proposed by General Secretary Xi Jinping in the Discipline Inspection Work of Central Enterprises”,“Measures for Fault Tolerance and Error Correction of Leaders of State-owned Enterprises in Shanxi Province(Trial Implementation)”,“Implementation Measures for Fault Tolerance and Error Correction of Reform and Development of State-owned Enterprises in Zhuhai City(Trial Implementation)”,etc.These policy documents create a loose fault-tolerance environment for the management of state-owned enterprises to reform and dare to assume responsibility,and solve the worries of the management of state-owned enterprises.Meanwhile,they effectively supervise the power of the management of state-owned enterprises,and restrict the behavior of the management of state-owned enterprises to seek their own interests to some extent.The existing research on fault-tolerance and error-correction mechanisms mainly focuses on normative and qualitative discussions.The academic community rarely uses empirical research methods to examine the effects of fault-tolerance and error-correction mechanisms from the perspective of the investment behavior of state-owned enterprises.A few scholars have found that fault-tolerance and error-correction mechanisms have significantly improved the level of innovation investment and patent output of state-owned enterprises.However,scholars have only examined the impact of the implementation of fault-tolerance and error-correction mechanisms on the innovation activities of state-owned enterprises and functional mechanisms.Moreover,fault-tolerance and error-correction mechanisms are mainly measured by whether state-owned enterprises have developed fault-tolerance and error-correction mechanisms at their own level.There are certain differences in the fit between such research designs and this empirical issue.The relationship between the implementation of fault-tolerance and error-correction mechanisms and the investment behavior of state-owned enterprises needs to be further verified.Therefore,this article attempts to follow the logical chain of “macro policy-micro enterprises”,using whether the region where the actual controller of state-owned listed companies is located has introduced fault-tolerance and error-correction mechanisms to measure the fault-tolerance and error-correction mechanisms,and investigate the impact of staggered implementation of fault-tolerance and error-correction mechanisms on investment behavior of state-owned enterprises in China from the perspective of internal and external investment of state-owned enterprises.As one of the important strategic decisions of enterprises,corporate investment decision-making behavior plays a pivotal role in promoting the rational allocation of funds,promoting resource integration,and achieving high-quality economic development.According to the theory of corporate growth,there are two main ways for enterprises to develop and continue to grow.One is endogenous growth,which relies on internal resources to achieve corporate growth through the integration and allocation of resources.The other is extensional growth,which obtains external corporate resources through expansion methods such as mergers and acquisitions,thereby promoting corporate development.Therefore,according to the different investment purposes and positioning,this paper divides the investment behavior of enterprises closely related to the fault-tolerance and error-correction mechanisms into internal investment behavior and external investment behavior,that is,fixed assets investment to expand reproduction,innovative investment to pursue high-quality development,and M&A investment to improve economies of scale.Existing scholars mainly discuss the impact of external institutional environment and internal corporate governance on corporate fixed assets investment,innovation investment and M&A investment.Few scholars systematically investigate the impact of China’s staggered implementation of fault-tolerance and error-correction mechanisms on investment behavior of state-owned enterprises from the overall perspective of investment of state-owned enterprises.Based on this,this paper takes the staggered implementation of fault-tolerance and error-correction mechanisms by the government as the research background,and discusses the impact of fault-tolerance and error-correction mechanisms on fixed assets investment,innovation investment and M&A investment of state-owned enterprises.Firstly,will fault-tolerance and error-correction mechanisms have an impact on the investment behavior of state-owned enterprises and what impact? Secondly,what is the influencing mechanism of fault-tolerance and error-correction mechanisms on the investment behavior of state-owned enterprises? Thirdly,how will the differences between the external institutional environment and internal corporate governance affect the relationship between fault-tolerance and error-correction mechanisms and the investment behavior of state-owned enterprises?The main research conclusions are as follows.Firstly,fault-tolerance and error-correction mechanisms have a positive effect on the investment behavior of state-owned enterprises.That is,fault-tolerance and error-correction mechanisms have significantly promoted fixed assets investment,innovation investment and M&A investment of state-owned enterprises.The main reasons are as follows.On one hand,fault-tolerance and error-correction mechanisms can supervise the management of state-owned enterprises more effectively,restrict the behavior of the management of state-owned enterprises to a certain extent,and reduce the problems of the management seeking private interests and dereliction of duty,thus promoting the investment behavior of state-owned enterprises.On the other hand,fault-tolerance and error-correction mechanisms tolerate the failures and setbacks of the management of state-owned enterprises in the process of investment,improve the tolerance and willingness of the management of state-owned enterprises to take risks,thus promoting the investment behavior of state-owned enterprises.Secondly,in order to explore the influencing mechanism of fault-tolerance and error-correction mechanisms on the investment behavior of state-owned enterprises,this paper examines the corporate governance mechanism and risk-bearing mechanism to reveal how fault-tolerance and error-correction mechanisms affect the investment behavior of state-owned enterprises.The study found that fault-tolerance and error-correction mechanisms significantly promoted the investment of state-owned enterprises by improving the level of corporate governance and corporate risk.This directly confirmed the influencing mechanism of fault-tolerance and error-correction mechanisms on the investment behavior of state-owned enterprises,and opened up the logical chain of “macro policy-micro enterprises”.Thirdly,this paper examines the different effects of fault-tolerance and error-correction mechanisms on the investment behavior of state-owned enterprises in combination with the differences in the external institutional environment and the internal governance characteristics of enterprises in China.The study found that fault-tolerance and error-correction mechanisms have a more obvious role in promoting the investment behavior of state-owned enterprises in groups with low industrial competition,poor regional legal environment,strong promotion incentives for senior executives,and short tenure of senior executives.This proves from the side that fault-tolerance and error-correction mechanisms can effectively alleviate the principal-agent problem and improve the level of risk bearing,thus improving the investment level of state-owned enterprises.The possible research innovations of this paper are as follows.Firstly,this paper puts the investment behavior of state-owned enterprises in the Chinese context of the staggered implementation of fault-tolerance and error-correction mechanisms by the government.It opens up the logical chain of“macro policy-micro enterprises”,and overcomes the shortcomings of existing research to some extent.The existing relevant literature on fault-tolerance and error-correction mechanisms mainly focuses on the discussion of the normative and qualitative aspects.This paper expands this from a quantitative perspective,which is helpful to comprehensively understand the impact of the implementation of fault-tolerance and error-correction mechanisms.Secondly,this paper not only examines the impact of fault-tolerance and error-correction mechanisms on fixed assets investment aiming to expand reproduction,but also further discusses the impact of fault-tolerance and error-correction mechanisms on innovation investment aiming to pursue high-quality development and M&A investment aiming to improve economies of scale,which systematically expounds the impact and influencing mechanism of fault-tolerance and error-correction mechanisms on the investment behavior of state-owned enterprises.The existing research on the impact of fault-tolerance and error-correction mechanisms on corporate investment behavior only focuses on the fault-tolerance and error-correction mechanisms on corporate innovation investment,neglects the impact of fault-tolerance and error-correction mechanisms on corporate fixed assets investment and M&A investment,and separates the integrity of the impact of fault-tolerance and error-correction mechanisms on state-owned enterprise investment behavior,which is supplemented in this paper.Thirdly,this paper uses the staggered implementation of fault-tolerance and error-correction mechanisms by the government as an external shock to design a quasi-natural experiment,and uses the multi-period difference-in-differences model to investigate the impact of fault-tolerance and error-correction mechanisms on the investment behavior of state-owned enterprises.The existing research on the impact of fault-tolerance and error-correction mechanisms on the investment behavior of enterprises is mainly to design the empirical model from the perspective of whether the state-owned enterprises have developed fault-tolerance and error-correction mechanisms at their own levels.This paper constructs the model from the perspective of whether the government has implemented fault-tolerance and error-correction mechanisms.This empirical design is more suitable for the research problem and can better avoid the interference of other factors.Fourthly,this paper finds that fault-tolerance and error-correction mechanisms have significantly promoted the fixed assets investment,innovation investment and M&A investment of state-owned enterprises.This research conclusion confirms the significance of fault-tolerance and error-correction mechanisms,and provides a practical basis for carring out fault-tolerance and error-correction mechanisms in China.At the same time,this paper empirically tests that the corporate governance mechanism and the risk-bearing mechanism are the functional path,which can not only provide practical reference for the design of the incentive mechanism of state-owned enterprises,but also have certain policy implications for promoting the high-quality development of state-owned enterprises.