The Impact Of Exports On Firms’ Innovation

Exports and technological innovation are two important parts of daily operations in a company. Chinese economy has shown in the "new normal" of the moment, Chinese companies should get rid of relying heavily on natural resources, human resources and investment, turning from "Made in China" to "Create in China",In the meanwhile, they should participate actively in international trade to fully explore overseas market.So at the corporate level, what’s the relationship between exports and technological innovation? How do they influence each other? This topic has a significant meaning on companies’development strategies. According to existing researches, companies with stronger innovation ability have a higher probability participate in overseas market. This conclusion has been verified by empirical data from many different countries. In contrast, there is few discussions on how exports affects technological innovation. According to this, the paper controls the factors of company size, age, government subsidy, debt ratio, corporate governance indicators, etc. Then we focus on the influence of product exports.The paper selects 695 Chinese publicly listing firms’ data during 2009 to 2014 as samples. We use the proportion of R&D expenses and operating income (R&D intensity) as the measurement of technological innovation, the proportion of overseas revenue and operating income (exports intensity) as the measurement of product exports. Given that technological innovation projects always keep several years, the current technological innovation projects will continue to get investment in the next period. So lagged terms of R&D intensity are put into the model, building a dynamic panel data model.The paper use system GMM method to estimate the dynamic panel data model. The empirical results show:firstly, for Chinese public publicly listing firms, exports intensity has a significant inhibitory effect on R&D intensity, which means that company with higher exports intensity owns an "inertia" on technological innovation. Exports intensity increasing 1% in one period causes a 0.21% decrease on R&D intensity in next period. Secondly, government subsidy promotes technological innovation. The proportion of government subsidies and operating income increasing 1% causes a 0.15% increase on R&D intensity. Thirdly, a low debt ratio helps the company to invest more resources in technological innovation. Fourthly, non-state owned holding companies and newer companies are more interested in technological innovation. The paper divides the data into groups to study them comparatively. The conclusions above remain robustThrough the empirical research on Chinese publicly listing firms, the paper gets some valuable revelations:firstly companies should overcome the "inertia" in technological innovation and participate actively in R&D and innovation activities. Then government should give companies fully supports in technological innovation. At last state-owned companies need to enhance their technological innovation ability.