To Trump or Not to Trump? Impact of Competition on Innovations of IT Industry

Posted: 20 Aug 2018

See all articles by Tao Chen

Tao Chen

Nanyang Technological University (NTU) - Division of Banking & Finance

Hsing Kenneth Cheng

University of Florida - Warrington College of Business

Yong Jin

The Hong Kong Polytechnic University - School of Accounting and Finance

Shengli Li

Xi'an Jiaotong University (XJTU)

Liangfei Qiu

University of Florida - Warrington College of Business Administration

Date Written: August 7, 2018

Abstract

Innovation and competition are two major pillars in the IT industry. In this paper, we examine the causal relationship between product market competitiveness and the innovations in the IT industry. We measure the innovations from both the quantity (number of patents) and the quality (number of non-self citations) perspectives. Based on Herfindahl-Hirschman Index and natural experiments, we find robust evidence that the competition has a positive effect on the innovations of the IT industry. Specifically, after the exogenous shock to the market (import tariff cuts and thus increased industry competition), the number of patents per IT firm increases by 27.3% and the number of non-self citations per IT firm increases by 38.2% on average. The effects are more pronounced in the more competitive sectors.

Keywords: Product Market Competition, Innovation, Information Technology, Patent, Import Tariff

Suggested Citation

Chen, Tao and Cheng, Hsing Kenneth and Jin, Yong and Li, Shengli and Qiu, Liangfei, To Trump or Not to Trump? Impact of Competition on Innovations of IT Industry (August 7, 2018). Available at SSRN: https://ssrn.com/abstract=3227747

Tao Chen

Nanyang Technological University (NTU) - Division of Banking & Finance ( email )

S3-B1A-08, Nanyang Avenue
Singapore, 639798
Singapore

Hsing Kenneth Cheng

University of Florida - Warrington College of Business ( email )

P.O. Box 117169
Gainesville, FL 32611-7169
United States
352-392-7068 (Phone)
352-392-5438 (Fax)

Yong Jin (Contact Author)

The Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Hong Kong

Shengli Li

Xi'an Jiaotong University (XJTU) ( email )

26 Xianning W Rd.
Xi'an Jiao Tong University
Xi'an, Shaanxi 710049
China

Liangfei Qiu

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

HOME PAGE: http://sites.google.com/site/qiuliangfei/

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