Research On The Effect Of Formal Institutional Environments And Politics To The Investments Of Scientific And Technological Enterprise On Technical Innovation

In the era of Knowledge Economy, innovation is an important source of the enterprise’s competitive advantage. Constructing to be an innovation nation has been integrated to the nation’s strategies. But as a part of the national system, enterprises’ performance is not lively. Most of the companies in China are engaged in low technical manufacturing, and are at a disadvantage compared with the ones in developed countries. Affected by the financial crisis, the economic in foreign countries increased slowly. As a result of it, the exports reduced. On the other hand, the labor price rise quickly in this years. Many companies of coastal areas have been bankrupt. If the owner wants his enterprise to be standing in a long time, it should turn its strategy from cost to technical innovation.The technical innovation of enterprises will be effected by the external environment, and institution is the most important factors. Because it is the rule for the behavior of enterprise and it keep the enterprises’benefit to be protected. Chinese economic is in transitional period, the institutional arrangement is not perfect, so the officer of the government and the enterprise have enough space to seek rant for much benefit. The deficiencies of formal mechanism need the informal mechanism to be served as a substitute protecting mechanism of the imperfect market. As the most important informal mechanism, political connection has been widely accepted by the market. Most of the private enterprises are willing to build up relationship with the government by many ways. This relationship may bring them more chance and resource, and keep their assets to be safer. Many researchers discovered that the enterprises with relationship could get more bank loans, were easy to enter in the industries controlled by the government, and get more benefits.The existing researches are most focused on the effect of single factor to the innovation of enterprises, such as government intervention, property right protection, etc. This paper studies the comprehensive influence of formal institution and informal institution to technical innovation. Government intervention, property right protection and finance development are formal aspects; and political relationship is the only informal aspects in this research. We chose139small and medium private high-tech enterprises in Shenzhen GEM during2010-2012as samples. We found that:(1) the enterprises in those areas with less government intervention, higher property right protection and finance development, would increase the investment on innovation.(2) The enterprises with political relationship invest less on innovation.(3) The relationship has a regulation to the influence of formal mechanism on private enterprises’technical innovation. In area which ones’government intervention was more powerful, regional property right protection level lower, the enterprises with relationship would invest more than the ones without relationship, but the regulation on finance was not significant. The relationship with the government can be looked as a substitute protecting mechanism of the imperfect market for the private enterprises.We researched the effects of formal and informal mechanisms’on small and medium private enterprises’innovation at the same time developed the existing theories.On the other hand, the results give guidance for the government to formulate supportive policies on innovation.