Do Innovation Inputs Bring Extra Profits To The Corporation?

In the era of knowledge economy, there is no doubt that the capability of technology innovation is the drive of economic growth, as well as the key to improve comprehensive national strength and corporation's competitive strength. In recent years, many domestic companies have already realized the importance of technology innovation, and have made substantive investments in the research and development projects under the long-term developmental goal based on innovation strategy. The reason why so many companies made the innovation investments is nothing but to outperform other competitors, acquire extra profits. Then, did the innovation inputs make contribution to the corporation's extra profits? That's what this article is going to find out.About the performance discrepancy between companies, many researches had showed that the heterogeneous resources or capabilities, including capability of innovation or research and development, are the key to explain the difference of firm's profits. The innovation theory pointed out that the innovation activity, including technology innovation and mechanism innovation, promoted by entrepreneur is one of the important sources of corporation's extra profits.Based on the researches mentioned hereinbefore, combined with the rent theory, the author thought technological innovation inputs can bring extra profits to the corporation: on one hand, the innovation inputs, as a kind of knowledge inputs, can form and improve the innovation capability which helps to shape heterogeneous resources or capabilities. Then the heterogeneous resources or capabilities can bring extra profits to the company. On the other hand, the innovator can benefit from the outcome of innovation inputs, thanks to the new technology's exclusiveness and difficulty to be imitated, or the protection from patent law, which will form technical barrier for the other rivals to enter the new product market and share the pie. At that time, the initial innovator could gain the rent or extra profits.This article investigated the correlation between innovation inputs and corporation's extra profits through empirical approach and the conclusions are: (1) The innovation inputs are both significantly positive correlate with corporation's extra profits, which indicate that innovation inputs do make contribution to the corporation's extra profits. (2)Compared with non high-tech industry, the innovation inputs invested by high-tech industry had larger effect on the extra profits. (3)Firm size is an important factor that impacted the economic effect of corporation's innovation inputs and the innovation inputs invested by small-sized company can bring more extra profits. All this results showed that the corporation's innovation activity and innovation inputs are an effective way not only to survive in the competition, but also to gain extra profits.