The Influence Of Internal Financing On Heterogeneous Enterprises’ Productivity

Recent decades,with growing trend of globalization,there has been an increasingly smooth channel to the international market.In reality,if companies can break through the "productivity threshold" of export,the profit in business is expected to be more than a single domestic market,then it is wisdom to select export business to get a higher interest.On the contrary,companies choose not to export.In view of this,discuss the determinants of firm productivity is particularly important.Current researches related to this area have focused on the influence of macro financial condition on the social productivity,less on the investigation to the micro enterprise.At the same time more research focused on external financing.Therefore,this paper studies the relationship between industrial enterprise productivity in term of micro level,and with the factor of export and liquidity,we explore the TFP decision mechanism from a new perspective.First of all,we summarize the papers of the New-New Trade Theory,Firm Heterogeneity,the Financial and Credit constraints,Learning and Self-selection Effect and corporate financing decisions according to the Pecking order theory.Also,related literature and comments were reviewed.Then,we propose theoretical assumptions based on these theories,as a preference of the later statistical analysis and the text of empirical data.Such as the self-selected critical value of enterprise productivity,enterprise with more capital also has higher TFP,endogenous financing is the important source of enterprise’s productivity growth,etc.Secondly,this paper takes 2000--2007 China’s industrial enterprises as a base database to do a test of the theoretical assumptions.This data set contains 202,056 companies and 909,825 pieces observations.Based on this database,we analyze the typical facts of Chinese industrial enterprises about the endogenous financing and productivity characteristics,and find that:China’s industrial enterprises TFP has been growing since 2000,with the overall upward trend in the growth rate of about 10%;Foreign enterprises have the most strong ability to make use of produce elements,while state-owned enterprises are more easily to face a resource waste;The productivity of Chinese export enterprises is higher than the average productivity of non-exporters,the former also has a better internal financing conditions.But all domestic enterprises have a poor degree of utilization of the source of financing;there is a generally positive linear correlation between the level of cash flow and the corresponding enterprise TFPThirdly,through descriptive statistical analysis and empirical testing.Based on the classification of flow character,nature of ownership,export and region,high degree of industrialization,we put the System GMM Regression method on the different kinds of sample to find the result respectively.To demonstrate the robustness of the results,we expanded the original model into few correction model,meanwhile,we replace the dependent variable with substitution.Our study found that TFP is indeed showed a significant positive correlation with the enterprise’s cash flow level which represents the level of endogenous financing,while companies with better financial condition tend to have a higher TFP,also,alleviated constrain of endogenous financing erects a positive influence on TFP.More detailed,in terms of export,exporters have finance from inner company way more than those who choose not to export,and the larger the export scale they have,the more TFP will they get and the export behavior exaggerates this positive effect;liquidity has an indirect impact on TFP when enterprise ranks in high technology industrials.Based on the above analysis,besides the different behavior in TFP,all kinds of enterprises hold different condition in the relationship between China’s industrial enterprises TFP and internal financing.That is,the status of export enterprises seemed better.In addition,companies with different liquidity conditions and export performance also show different sensitivity to the relationship of "cash flow-productivity".Finally,according to all of the above methods and the following conclusions based on heterogeneous enterprise theory,we put forward policy recommendations for different companies.That is:enterprise should take suitable method to improve their TFP according to their own characters and our country still needs to improve the financing environment,and to encourage the gradual liberalization of the export enterprises of different ownership in order to achieve optimal levels of productivity and higher resource allocation.