Ownership and firm innovation in a transition economy: Evidence from China

Suk Bong Choi, Soo Hee Lee, Christopher Williams*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We examine innovation performance of firms in a transition economy from an ownership perspective. We focus specifically on the relationship between ownership structures and firm innovation performance. Drawing on data from 548 Chinese firms we find volume of patent registration to be most strongly influenced by foreign ownership in the firm along with firm affiliation within a business group. The influence of state and institutional ownership on innovation performance is positive but lagged. Contrary to expectations, insider ownership leads to lower innovation performance and concentrated ownership has no significant impact. Our study has two principal contributions. Firstly, we utilize a comprehensive treatment of ownership characteristics, overcoming weakness in previous studies that have used a more narrow focus on ownership type. Secondly, we contribute to understanding of how firms in transition economies build 'indigenous' capabilities for innovation by drawing attention to the interplay of foreign and domestic control of agents' innovation.

Original languageEnglish
Pages (from-to)441-452
Number of pages12
JournalResearch policy
Volume40
Issue number3
DOIs
Publication statusPublished - Apr 2011

Keywords

  • Business groups
  • China
  • Corporate governance
  • Innovation performance
  • Ownership structure

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