R&D Investment, Productivity Improvement And Product Quality Upgrade

With the continuous deepening of reform and opening up,the innovation activities of Chinese enterprises are changing from an increase in total volume to a phase of structural adjustment.In formulating the R&D strategy,not only must the company choose the optimal total R&D investment,but it also needs to consider whether the structure of the R&D investment is reasonable,including how to innovate and how to allocate limited R&D funds.There is a lot of studies discussing the determining mechanism and influencing factors of the total amount of R&D from the macro level of the country and industry.However,the results of studying the R&D structure of enterprises from a micro perspective are still relatively insufficient.In this context,it is of theoretical and practical significance to reproduce the internal structure of enterprise innovation and analyze the transmission mechanism of R&D investment from the perspective of innovation heterogeneityDrawing on Schumpeter's(1911)concept of innovation,this article divides enterprises' innovation into "process innovation" and "product innovation",and uses "productivity improvement" and "product quality upgrade" as proxy variables for both.In the theoretical model,the R&D functions of productivity and product quality are simultaneously embedded in the classic theoretical model of heterogeneous enterprise to internalize the company's R&D process and discuss the impact of different R&D strategies and different trade shocks on productivity and product quality.The main theoretical conclusion is that in a competitive market,R&D output for productivity and product quality are affected by the average market price,wage rate,and trade shocks.In different market environments,companies have different tendencies to choose productivity innovation and product quality innovation.The higher the average market price,the more companies tend to develop higher level of product quality,and the greater the labor and trade costs,the more they tend to conduct productivity research and development.On this basis,this article estimates the product quality and total factor productivity of more than 1,000 export listed companies in China from 2006 to 2015 based on the China Customs Import and Export Database and the Listed Company Database.The theoretical research conclusions are empirically tested by merging the databases.The results show that R&D investment significantly promotes the productivity improvement and product quality upgrade of China's export listed companies,and this promotion is affected by the wage rate,average market price,and tariffs.There is an “incentive effect” of the average market price,which increases the positive impact of R&D on productivity and product quality,while there is a “cost effect” of wage levels and tariffs,which weakens the positive impact of R&D on productivity and product quality.