TITLE:
Influential Factors of Innovation Input Decisions: Evidence of Chinese Listed Companies
AUTHORS:
Zhijun Lin, Shijie Wang, Shizhong Yang
KEYWORDS:
Corporate Innovation, Innovation Input Decisions, Cournot Equilibrium, Government Subsidies, R&D Investment, Chinese Economy
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.11 No.3,
March
17,
2021
ABSTRACT: This study analyzes the influential factors underlying corporate innovation input decisions with a theoretical framework based on Cournot Equilibrium in game theory. By identifying the influential factors in theoretical deduction, we incorporate these factors with a sample of Chinese listed companies to empirically examine their impact on corporate innovation input decisions (e.g., R&D investment). The results reveal that corporate innovation input in terms of R & D investment is negatively associated with innovation risk, product cost and cost of capital, and positively related to profitability and innovation efficacy, which are consistent with the inferences of the theoretical framework and confirm the validity of our analytical model. With expanded sample range (multi-industries) and incorporation of market and governmental factors simultaneously, the findings are confirmatory to the main views of previous studies, and help to clarify the inconsistency in the findings in the extant literature. However, our empirical findings show that the type of business ownership (nature of equity right) and the level of regional marketization development do not significantly affect corporate R&D investment by the sample Chinese listed companies at present. This may be an evidence to support the development status of a market economy in China.