Does Mixed-Ownership Reform Improve SOEs’ Innovation? Evidence from State Ownership

22 Pages Posted: 23 Mar 2021 Last revised: 12 Apr 2021

See all articles by Xiaoqian Zhang

Xiaoqian Zhang

Zhejiang University - College of Economics

Date Written: April 3, 2018


This paper investigates the impact of the ongoing mixed-ownership reform on the innovation activities of SOEs in China. We find that the reform improves SOE’s innovation, and the impact is heterogeneous, by exploring in different industries and different regions with the influence of macroeconomic environment. This effect is stronger for SOEs in monopoly industries and eastern developed region. As a new form of state-sector reform, this mixed-ownership reform happens not only in SOEs like previous privatization, but also in a reverse direction. We also find its positive impact of improving the innovation for POEs being mix-reformed. To deal with endogeneity concerns, PSM, DiD and IV estimations are used. We also introduce highway as an instrumental variable, All the results in the 2SLS estimations are robust. Additional tests help isolate the effect of intervention from explanations of macro-economic effects, including house price, private employees, credit and equity finance.

Keywords: Innovation; Propensity score matching; Difference-in-differences approach; China reform

JEL Classification: K23, G15, G32

Suggested Citation

Zhang, Xiaoqian, Does Mixed-Ownership Reform Improve SOEs’ Innovation? Evidence from State Ownership (April 3, 2018). China Economic Review, Vol. 61 (2020), Available at SSRN:

Xiaoqian Zhang (Contact Author)

Zhejiang University - College of Economics ( email )

Yuquan Campus 38 Zheda Road
Hangzhou, Zhejiang 310027

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