State Ownership and Corporate Innovation Efficiency

53 Pages Posted: 12 Nov 2016 Last revised: 28 Nov 2018

See all articles by Xiaping Cao

Xiaping Cao

SUN YAT-SEN UNIVERSITY

Douglas J. Cumming

Florida Atlantic University

Sili Zhou

Fanhai International School of Finance and School of Economics, Fudan University

Date Written: November 20, 2018

Abstract

The conventional wisdom is that state ownership may hinder patenting through reduced incentives and pronounced agency problems associated with state-owned enterprises (SOEs). Empirical evidence from a variety of contexts, including the U.S., Europe, and China, is consistent with this view, that reductions in state ownership are associated with an increase in patent counts. In this paper, we investigate the innovative efficiency of Chinese SOEs. Innovative efficiency refers to output of patents per dollar spending of R&D expenditure. The data indicate that SOEs, especially SOEs that serve minority shareholders, are substantially more innovatively efficient than non-SOEs. The relative innovative efficiency of SOEs is more pronounced amongst firms with high financial constraints and those away from financial centers. The data are consistent with the view that, in the Chinese context, there are favorable benefits to state ownership through access to talent, connections, and technological resources that enables efficient patent outcomes from R&D expenditure.

Keywords: State ownership, Innovative efficiency, Financial constraints

JEL Classification: G32, G38, O31, O38

Suggested Citation

Cao, Xiaping and Cumming, Douglas J. and Zhou, Sili, State Ownership and Corporate Innovation Efficiency (November 20, 2018). Available at SSRN: https://ssrn.com/abstract=2868036 or http://dx.doi.org/10.2139/ssrn.2868036

Xiaping Cao

SUN YAT-SEN UNIVERSITY ( email )

135 Xingang Xi Road
Guangzhou, 510275
China
+862084111154 (Phone)

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Sili Zhou (Contact Author)

Fanhai International School of Finance and School of Economics, Fudan University ( email )

Room 520, Building 5, 220 Handan Road
Shanghai
China

HOME PAGE: http://siliz.weebly.com/

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