Has EVA Assessment Improved Enterprise Independent Innovation?

Since the first announcement of SASAC (State-owned Assets Supervision and Administration Commission) to carry out EVA (Economic Value Added) in central enterprises in 2010, EVA serving as part of managers’performance evaluation system has been almost six years. During the period, several policies have been launched in order to promote its status in the system. In such circumstance, both theory and practice circles are focusing on the effective of EVA in Chinese enterprises. Researches about the influences of EVA have been meticulously analyzed by scholars in domestic and abroad. However, most of them emphasize on the affects of EVA on investment effectiveness and firm value. Little of them analyze the relation between EVA and independent innovation. It is known to all that independent innovation is the key to the sustainable development of firms and foundation to the achievement of Chinese development strategy. So how to enhance the independent innovation capacity is essential to firms and the state. The existing researches indicate that the agency problem is the course to the low level of innovation capacity. When the benefits of managers and shareholders are different, managers do not want or act negatively to the innovation as it is high input, long-term and risky. Luckily, EVA is good at solving this problem. It can lead the benefits of managers and shareholders to the same one. Based on this, this paper researches the influence on EVA on the independent innovation capacity by theoretical and empirical analysis.Firstly, the paper focuses on the EVA formula imported by SASAC and analyzes its influence on the managers’behavior. Then, the paper analyzes the definition and mechanism of independent innovation capacity according to innovation theory. And based on the agent theory, the paper analyzes how EVA affects the independent innovation capacity of firms. After that, the paper selects the data of state-owned listed companies in Shanghai and Shenzhen stock market from 2010 to 2013. The hypothesizes are verified according to the data. During the empirical analysis, the paper selects innovation input and output as explained variables, EVA implement situation as explaining variable. The paper constructs its test models based on intermediate inspection procedure. A step further, in order to test the difference of EVA’s influence on independent innovation capacity when the industry is various, the paper adopts clustering methodology to divide sample into labor intensive industry, capital intensive industry and technology intensive industry. And subgroup testing is used for this hypothesis. The results show that:firstly, the EVA implement can significantly raise the R&D input and output; secondly, the EVA assessment can also lead the managers’ behavior to enhance R&D input, and improve the innovation outputs; fourthly, the influence of EVA on independent innovation capacity is difference as the difference of industries.The innovation points of this paper include the following aspects. Firstly, the former researches mainly focus on the affects of EVA on investment efficiency and firm value. This paper analyzes the influence of EVA on independent innovation capacity, which enriches the researches on influences of EVA. Secondly, the paper analyzes the influence path of EVA on the innovation outputs and the impact of EVA formula adjustment. Thirdly, the paper analyzes the impact of industry difference based on clustering analysis.The shortages of this paper include the following aspects. Firstly, the measurement of independent innovation capacity only bases on input and output. The whole innovation process can not be covered. Secondly, as the EVA implement is at its starting page and the innovation output is hysteretic, the data acquired may affect the result to some degree.