Trust and Corporate Innovation

52 Pages Posted: 1 Nov 2019

See all articles by Yijun Meng

Yijun Meng

Formerly Known as Shanghai Institute of Foreign Trade

Xun Wang

Peking University

GuoGuo Zhang

Shanghai University

Shilin Zheng

National School of Development Peking University

Date Written: October 23, 2019

Abstract

This paper examines the relation between the level of societal trust and corporate innovation in the worldwide. Using data on firms located in 72 countries or regions from1992 to 2016, we quantify the country trust level and find strong evidence that firms in countries with a higher level of societal trust have higher R&D investment input. We also find that the impact of societal trust on firms’ innovation behavior is more pronounced in the firms with a higher level of financial constraints and in the countries with a poor intellectual property rights protection. Overall, our results highlight the effect of societal trust in shaping enterprise innovation behavior.

Keywords: Societal trust, R&D expenditure, Financial constraints, Intellectual property rights protection

JEL Classification: F22, G34, G38

Suggested Citation

Meng, Yijun and Wang, Xun and Zhang, GuoGuo and Zheng, Shilin, Trust and Corporate Innovation (October 23, 2019). Available at SSRN: https://ssrn.com/abstract=3474170

Yijun Meng

Formerly Known as Shanghai Institute of Foreign Trade

No. 1900, Wenxiang Road
Shanghai, 201620
China

Xun Wang

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

GuoGuo Zhang

Shanghai University

149 Yanchang Road
SHANGDA ROAD 99
Shanghai 200072, SHANGHAI 200444
China

Shilin Zheng (Contact Author)

National School of Development Peking University ( email )

No.5 Summer Palace road
Beijing 100871
China

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