Institutions, organizations, and technological innovation in Chinese industry

This thesis consists of three chapters providing an integrated analysis of the relationship between institutions, organizations, and technological innovation in Chinese industry.; Chapter One examines the relationship between innovation investment and productivity in China's enterprises. I construct an empirical model that contains a system of three equations---function, private R&D equation, and government R&D equation. Estimating the model using cross-section data for Chinese enterprises of various ownership types, I find a strong link between private R&D and firm productivity. Although the direct contribution of government R&D to firm productivity is insignificant, by promoting private R&D, government R&D contributes indirectly to productivity. A policy implication is that providing incentive for enterprises to invest in R&D may be a better policy alternative than directly providing R&D grant.; Chapter Two investigates the relationship between organizational design and technological innovation in Chinese industry. I build a principal-agent model, where monitoring intensity is endogenously determined and is shown to have a positive impact on innovation performance. My empirical model contains a recursive system of two equations: one for innovation production and one for monitoring intensity. A nonlinear two-stage estimator is Led to estimate the innovation production function. I apply the model to a panel data set of large- and medium-sized Chinese state-owned enterprises and estimate the first knowledge production function for China's enterprises. I find consistent evidence that monitoring, indicated by the existence of an R&D organization, affects innovation performance in a positive and significant way.; Chapter Three tries to achieve two goals: to describe China's industrial innovation system and to create an analytical framework that captures the structure and dynamics of the system. China's national innovation system is making the transition from a centrally planned system to a hybrid system that combines features of a plan innovation system and a market innovation system. I use a heuristic six-equation model that characterizes government R&D support, own R&D effort, innovation production, technology transfer, enterprise performance, and institutional evolution to describe China's plan and market innovation systems and their interactions and evolutions.