How State Ownership Affects Firm Innovation Performance: Evidence from China

ABSTRACT

Innovation plays a vital role in economic development. This paper examined the effect of state ownership on firm innovation as well as the moderating roles of R&D capability and marketization by Chinese firm-level data from Chinese Industrial Enterprises (2008–2011) and listed companies (2007–2016). The theoretical and empirical study verified that state ownership positively influences firm innovation, and firm’s R&D capability and the degree of marketization have significant positive moderate effect. The result was robust in a series of checks such as using lagged data, adopting alternative identification methods and variables, and using independent replication. The conclusion provided implications for the management of Chinese firms. The unique innovation pattern of Chinese firms also provided enlightening experience to other emerging economies.

KEYWORDS:

• Innovation performance
• state ownership
• R&D capability
• marketization

JEL CLASSIFICATIONS:

• O31
• O32
• O38

Supplemental data

Supplemental data for this article can be accessed online at https://doi.org/10.1080/1540496X.2022.2137374

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [72103107], Zhejiang Provincial Natural Science Foundation of China [LQ21G030002].