State ownership, firm innovation and the moderating role of private-sector competition: the case of China

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hongyan Yang ◽  
H. Kevin Steensma ◽  
Ting Ren
Keyword(s):  
Private Sector ◽  
Market Competition ◽  
New Products ◽  
Economic Value ◽  
Innovation Process ◽  
State Ownership ◽  
The State ◽  
Innovation Performance ◽  
Firm Characteristics ◽  
Content Type

Purpose This paper aims to study how state ownership influences the innovation process in terms of allocating resources toward searching for new solutions and converting these efforts into economic value. On one hand, deep pockets of the state provide slack resources that may facilitate risk taking and innovation. On the other hand, soft budgets can create incentive problems and dampen the efficient use of resources. The authors suggest how accounting for competitive context can disentangle these countervailing forces. Design/methodology/approach The authors use a panel of over 240,000 Chinese firms over the years 2004–2008. The broad sample and period afforded substantial variability in terms of state ownership within and across firms. The authors use a two-stage model and a within-firm (i.e. fixed-effects) design, controlling for all time-invariant firm characteristics and the problematic unobserved heterogeneity that can often lead to erroneous inferences. Furthermore, the relatively short window limits the likelihood of time-varying unobserved firm characteristics biasing the empirical results. Findings The authors found that private-sector competition has the opposite effect on the relationship between state ownership and the second step of the innovation process. In industries where there is robust private-sector competition, state ownership diminishes the firm’s ability to convert R&D efforts into economic value. Private-sector competition competes away any advantages state-owned firms may have in terms of developing or accessing the complementary resources needed for commercialization. Ultimately, the inefficiencies of state ownership in terms of relatively undisciplined selection and monitoring of R&D activities outweigh any potential resource advantages derived from state ownership. Originality/value The state remains a prominent player in many economies throughout the world. The authors explored how state ownership of firms influences the resources they expend in searching out new solutions, and their success in converting such resources into economically valuable new products and services. State ownership has potentially countervailing effects on innovation. The authors disentangle these countervailing effects through consideration of how accounting for competitive context could determine whether the beneficial effects of state ownership dominate its detrimental effects for both searching for new solutions and converting these efforts into economically valuable new products. With a focus of market competition as an external force that drives the difference in innovation between SOEs and the private-sector, this study serves as a parallel effort to Jia et al. (2019) who investigate the joint effect of public and corporate governance on SOEs’ innovation performance, and Zhou et al. (2017) who concern the balance of the institution and efficiency logics on the comparative advantage of SOEs over privately owned enterprises in innovation performance.

Product market competition, state-ownership, corporate governance and firm performance

2018 ◽  
Vol 26 (1) ◽  
pp. 62-83 ◽  
Author(s):  
Li Liu ◽  
Wen Qu ◽  
Janto Haman
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Market Competition ◽  
State Ownership ◽  
Product Market Competition ◽  
Content Type ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
Negative Effect

Purpose The purpose of this paper is to examine the association between firm performance and product market competition (PMC), and then examine the mitigation effect of corporate governance and/or state-ownership (SOEs) in the association between PMC and firm performance using Chinese listed firms. Design/methodology/approach The authors consider three determinants of the PMC that affect the nature of competition, and use market concentration, product substitutability and market size as proxies for PMC. The authors construct a corporate governance index which measures the extent of board independence, monitoring strength of supervisory board over board of directors, and monitoring strength of board of directors over CEO. The authors use Tobin’s Q as a proxy for firm performance. The authors use a sample of 20,706 firm-year observations listed on the Chinese stock market between 2001 and 2016 to empirically investigate the research questions proposed in the paper. Findings The authors find that higher PMC is associated with lower firm performance. The authors find that good corporate governance practices moderate the negative effect of higher PMC on firm performance. The association between higher PMC and lower performance is weaker for firms controlled by SOEs compared to non-SOEs. Further, the moderation effect of SOEs on the association between higher PMC and lower performance is more pronounced for firms with good corporate governance practices compared to firms with weak corporate governance practices. Originality/value Extant studies investigating the relationship between PMC and corporate governance suggest an either complementary or substitution relationship in developed economies. Our study highlights the interactive role played by SOEs and good corporate governance practices in firm performance in highly competitive product markets in an emerging economy. The findings provide insightful information to regulators of other emerging countries that SOEs with good corporate governance practices can play an important role in the economy by mitigating the negative effect of higher PMC on firm performance.

Open innovation actions and innovation performance

2015 ◽  
Vol 18 (2) ◽  
pp. 150-171 ◽  
Author(s):  
Marco Greco ◽  
Michele Grimaldi ◽  
Livio Cricelli
Keyword(s):  
Open Innovation ◽  
State Of The Art ◽  
The State ◽  
Innovation Performance ◽  
European Countries ◽  
Future Directions ◽  
Content Type ◽  
Process Innovations ◽  
Product And Process Innovation ◽  
Product And Process

Purpose – The purpose of this paper is to identify the recurrences in the empirical evidences that link open innovation (OI) actions and innovation performance in European countries. It provides managers with useful strategic suggestions, emphasizes the limitations of the state of the art, and recommends future directions of research. Design/methodology/approach – The authors systematically reviewed empirical articles linking OI actions and innovation performance in European countries, published on peer reviewed journals from January 2003 until May 2013. The authors organized the evidences according to a novel taxonomy grounded in the literature. Findings – The paper shows an increasing interest in the research of empirical evidence regarding OI and innovation performance. Nonetheless, evidence of the role played by outbound OI activities are extremely rare. The authors found that process innovations are more likely to benefit from coupled OI activities rather than inbound activities. Moreover, the effect of coupled depth actions on both product and process innovation performance was always positive in the reviewed articles. The authors also discuss how scholars measure innovation performance, pointing out the criticalities. Research limitations/implications – The paper allows analysing the empirical evidences found in the literature, emphasizing the limitations of the state of the art and recommending future directions of research. Practical implications – The systematization of the empirical evidences found in the European literature provides managers with useful strategic suggestions to improve their organizations’ innovation performances. Originality/value – The paper contains a complete and extensive analysis of empirical OI literature with respect to European countries. The articles and their findings are organized according to a novel taxonomy useful to identify evidences and recurrences in a synoptic manner.

Competitive pressure and managerial decisions

2016 ◽  
Vol 10 (3) ◽  
pp. 559-592 ◽  
Author(s):  
Muhammad Ansar Majeed ◽  
Xian-zhi Zhang
Keyword(s):  
Financial Reporting ◽  
Market Competition ◽  
State Ownership ◽  
Regulatory Regime ◽  
Governance Mechanism ◽  
Content Type ◽  
Ifrs Adoption ◽  
Managerial Decisions ◽  
The Impact ◽  
The Relationship

Purpose This study aims to examine the impact of product market competition (PMC) from existing rivals and potential market entrants on earnings quality (EQ) in China. Design/methodology/approach This study examines the impact of PMC on EQ by using the EQ measure of Kothari et al. (2005), and it uses measures for competition from existing and potential rivals. This study analyzed Chinese firms for the period of 2000-2014 and also examined the impact of International Financial Reporting Standards (IFRS) adoption and state ownership on the relationship between PMC and EQ. Findings This study found a positive relationship between PMC and EQ. It also documents that competition from existing rivals does not improve EQ by reducing real activity manipulation, but competition from potential entrants does. The findings propose that market competition from existing rivals is a relevant factor for determining EQ before and after IFRS adoption, but competition from potential entrants improves EQ only after IFRS adoption. Moreover, the results suggest that market competition plays no role in improving the EQ of state-owned enterprises (SOEs). Originality/value The results support the argument that PMC acts as a governance mechanism and influences managerial decisions regarding financial reporting. Our study also helps to understand the impact of change in the regulatory regime, i.e. IFRS adoption, on the relationship between PMC and EQ. This study also helps demonstrate the impact of competition on management decisions with respect to the EQ of SOEs.

India’s banks will struggle to inspire confidence

2020 ◽  
Keyword(s):  
Private Sector ◽  
Banking Sector ◽  
The State ◽  
Regulatory Oversight ◽  
Content Type ◽  
Shadow Banks ◽  
Reserve Bank ◽  
High Level ◽  
Bad Debt ◽  
Reserve Bank Of India

Subject Problems in India's banking sector. Significance The Reserve Bank of India (RBI) earlier this month stepped in to rescue imperilled Yes Bank. The private sector lender had accumulated a high level of bad debt. Impacts Indian borrowers will be increasingly distrustful of shadow banks as well as banks. The State Bank of India could come under strain owing to its need to support Yes Bank financially. The RBI will come under growing pressure to improve its regulatory oversight of the banking sector.

The antecedents of innovation performance: the moderating role of top management team diversity

2019 ◽  
Vol 14 (2) ◽  
pp. 291-311 ◽  
Author(s):  
Peng-Yu Li ◽  
Kuo-Feng Huang
Keyword(s):  
Critical Role ◽  
Innovation Process ◽  
International Diversification ◽  
Top Management Teams ◽  
Innovation Performance ◽  
Top Management ◽  
Content Type ◽  
D Investment ◽  
Educational Diversity

PurposeThe purpose of this paper is to investigate why firms engaged in R&D investment and international diversification produce different results in innovation performance.Design/methodology/approachThis study is based on a sample of 283 Taiwanese manufacturing firms in the information technology industry.FindingsThe findings showed that in the top management teams (TMTs) with greater tenure diversity there was a stronger relationship between R&D investment and innovation performance. In addition, the TMTs with greater educational diversity enhanced the relationship between international diversification and innovation performance.Originality/valueThis study stresses the vital role of TMT diversity in resource allocation and information processing during the process of innovation. The authors examined the critical role of TMT educational diversity in bringing a wider range of network resources and the role of TMT tenure diversity in the allocation of firm-specific resources. The TMT diversity causes firms to experience different innovation results during the innovation process.

The nexus between product market competition and the quality of analysts’ forecasts: empirical evidence from Chinese-listed firms

2020 ◽  
Vol 14 (1) ◽  
pp. 15-30
Author(s):  
Amjad Iqbal ◽  
Khalil Jebran ◽  
Muhammad Umar
Keyword(s):  
Empirical Evidence ◽  
Market Competition ◽  
Positive Association ◽  
Product Market ◽  
State Ownership ◽  
Product Market Competition ◽  
Future Research ◽  
Manufacturing Companies ◽  
Content Type

Purpose This study aims to explore the relationship between product market competition (competition hereafter) and the quality of analysts’ forecasts. Design/methodology/approach This study uses industry-level (i.e. Herfindahl–Hirschman index), as well as firm-level (i.e. Lerner index) measures of competition and uses forecast accuracy and forecasts dispersion as proxies for analysts’ forecast quality. Further, this study considers a sample of Chinese-listed manufacturing companies for the period spanning 2005 to 2016 and uses various estimation techniques to empirically test the hypothesized relationship. Findings The results show that firms in highly competitive industries are characterized by greater accuracy and smaller dispersion in forecasts. Further, this positive association is more pronounced in SOEs as compared to NSOEs, and in industries characterized by intense competition. The sensitivity analysis further endorses the main results. Practical implications Presenting theoretical and empirical evidence, this study suggests that regulatory bodies should take steps to promote the competitive environment in China. This can help financial analysts in developing more accurate and reliable forecasts and ultimately can bring informational efficiency to the market. Finally, investors would be able to perform their business valuation process in a better way and make economic-useful decisions regarding their capital resource allocation. Originality/value The contribution of the current research is threefold: first, it adds to the limited literature available on this specific topic; second, this study examines the issue in China and further single out the influence of state-ownership and intensity of competition on the relation between competition and forecast properties; and third, this study provides theoretical arguments for the positive association between competition and forecasts quality while setting directions for future research on the topic and suggests the potential channels such as the reporting quality channel and the information disclosure channel that need to be explored further, to better understand the mechanism where competition influences the quality of analysts’ forecasts.

Organizational unlearning, knowledge generation strategies and radical innovation performance: evidence from a transitional economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Feng Zhang ◽  
Chongchong Lyu ◽  
Lei Zhu
Keyword(s):  
Knowledge Creation ◽  
Positive Relationship ◽  
Market Competition ◽  
Radical Innovation ◽  
Innovation Performance ◽  
Knowledge Generation ◽  
Content Type ◽  
Empirical Results ◽  
Types Of Knowledge ◽  
The Impact

Purpose Empirical results remain unclear as to whether organizational unlearning can improve radical innovation performance. The purpose of this study is to investigate how, and under which conditions, organizational unlearning influences firms’ radical innovation performance. Design/methodology/approach Drawing on the knowledge-based view, this study develops a theoretical model that hypothesizes a positive relationship between organizational unlearning and radical innovation performance, which is mediated by knowledge generation strategies. It also proposes that the impact of unlearning on knowledge generation strategies will be moderated by dysfunctional competition. Using survey data from 191 Chinese manufacturing firms, the hierarchical regressions were used to test the hypotheses. Findings The empirical results show that organizational unlearning not only impacts radical innovation performance directly, but also indirectly affects radical innovation performance through two distinct types of knowledge generation strategies: (internal) knowledge creation and (external) information searching. Moreover, dysfunctional competition plays a dual role, strengthening the positive relationship between organizational unlearning and information search and weakening the positive relationship between organizational unlearning and knowledge creation. Research limitations/implications The present research broadens the understanding of how to promote radical innovation performance, which has great potential to improve the performance of firms on the market. Specifically, it deepens the knowledge of how organizational unlearning facilitates radical innovation performance by focusing on two distinct types of knowledge generation strategies as the crucial links, and enriches existing literature on the effectiveness of organizational unlearning in a dysfunctional competitive environment. Practical implications Practicing organizational unlearning for firms’ long-term success requires firms to develop and implement appropriate knowledge generation strategies in accordance with the characteristics of market competition in their operating environment. Originality/value This study offers new insights into how and under what conditions organizational unlearning affects radical innovation performance, enhancing the understanding of how organizational unlearning can be implemented to drive firm radical innovation.

scholarly journals Unlocking innovation in the sport industry through additive manufacturing

2019 ◽  
Vol 25 (3) ◽  
pp. 456-475 ◽  
Author(s):  
Marlon Meier ◽  
Kim Hua Tan ◽  
Ming K. Lim ◽  
Leanne Chung
Keyword(s):  
Additive Manufacturing ◽  
Case Studies ◽  
Early Stage ◽  
New Products ◽  
Real Life ◽  
Innovation Process ◽  
Structured Interview ◽  
Research Approach ◽  
Small Range ◽  
Content Type

Purpose Fast-changing customer demands and rising requirements in product performance constantly challenge sports equipment manufacturers to come up with new and improved products to stay competitive. Additive manufacturing (AM), also referred to as 3D printing, can enhance the development of new products by providing an efficient approach of rapid prototyping. The purpose of this paper is to analyse the current adoption of AM technologies in the innovation process of the sports industry, i.e. level of awareness; how it is implemented; and it impact on the innovation process. Design/methodology/approach This work followed a qualitative research approach. After conducting a research of the current literature, this paper presents findings that include case studies from different companies, as well as a semi-structured interview with an outdoor sports equipment manufacturer. Companies from all over the world and of different sizes from under 100 employees to over 70,000 employees were considered in this research. Findings Literature research shows that AM brings many possibilities to enhance the innovation process, and case studies indicated several obstacles that hinder the technology from fully unfolding. AM is still at the early stage of entering the sports equipment industry and its potential benefits have not been fully exploited yet. The findings generated from the research of real-life practices show that AM provides several benefits when it comes to the innovation process, such as a faster development process, an optimised output, as well as the possibility to create new designs. However, companies are not yet able to enhance the innovation process in a way that leads to new products and new markets with AM. Limitations, including a small range of process able material and an inefficient mass production, still restrain the technology and lead to unused capability. Nevertheless, future prospects indicate the growing importance of AM in the innovation process and show that its advancement paves the way to new and innovative products. Research limitations/implications Limitations exist in the qualitative approach of this study, which does not include the quantitative verification of the results. Originality/value Very few studies have been conducted to investigate how firms can harvest AM to increase their innovation capabilities. How firms can use AM to shorten product development time is an emerging topic in business and operations but has not been studied widely. This paper aims to address this gap.

Determinants of skills demand in a state- intervening labour market

2017 ◽  
Vol 7 (4) ◽  
pp. 408-422 ◽  
Author(s):  
Khotso Tsotsotso ◽  
Elizabeth Montshiwa ◽  
Precious Tirivanhu ◽  
Tebogo Fish ◽  
Siyabonga Sibiya ◽  
...  
Keyword(s):  
South Africa ◽  
Private Sector ◽  
Labour Market ◽  
South African ◽  
The State ◽  
Transport Sector ◽  
Content Type ◽  
South Africans ◽  
Wage Rates ◽  
The Social

Purpose The purpose of this paper is to improve the understanding of the drivers and determinants of skills demand in South Africa, given the country’s history and its current design as a developmental state. Design/methodology/approach In this study, a mixed methods approach is used. The study draws information from in-depth interviews with transport sector stakeholders including employers, professional bodies, sector regulatory bodies and training providers. Complementary to the interviews, the study also analyses employer-reported workplace skills plans from 1,094 transport sector firms updated annually. A Heckman correction model is applied. Findings The study finds that changes in competition, technology, ageing employees, market conditions and government regulations are among the most frequently stated determinants reported through interviews. Using a Heckman regression model, the study identifies eight determining factors, which include location of firm, size of a firm, occupation type, racial and generational transformation, subsector of the firm, skills alignment to National Qualification Framework, reason for skills scarcity and level of skills scarcity reported. The South African transport sector skills demand is therefore mainly driven by the country’s history and consequently its current socio-economic policies as applied by the state itself. Research limitations/implications Wage rates are explored during stakeholder interviews and the study suggests that wage rates are an insignificant determinant of skills demand in the South African transport sector. However, due to poor reporting by firms, wage rates did not form a part of the quantitative analysis of the study. This serves as a limitation of the study. Practical implications Through this research, it is now clear that the state has more determining power (influence) in the transport sector than it was perceived. The state can use its power to be a more effective enabler towards increasing employer participation in skills development of the sector. Social implications With increased understanding and awareness of state’s influence in the sector, the country’s mission to redress the social ills of the former state on black South Africans stands a better chance of success. Private sector resources can be effectively mobilized to improve the social state of previously disadvantaged South Africans. However, given the economic dominance of the private sector and its former role in the apartheid era in South Africa; too much state influence in a supposedly free market can result in corporate resistance and consequently, market failure which can be seen as result of political interference. Originality/value South Africa has had an unprecedented social and economic trajectory to date. This said, its economic and social policies are unlike what we have observed before. Thus, identification of determinants and understanding of mechanisms of influence, on skills demand in the sector in which an African state plays such a close and active role, is in itself a unique contribution to knowledge and compels us to revisit our traditional assumptions about market behaviour. This study is one of the very few of its kind in the labour market research with a South African context.

Serbs will vote in 2022 with few independent media

2021 ◽  
Keyword(s):  
Joint Venture ◽  
State Ownership ◽  
The State ◽  
Eu Accession ◽  
Ruling Elite ◽  
Content Type ◽  
State Capture ◽  
The Media ◽  
Independent Media ◽  
Increased Pressure

Significance The government's tightening grip on the media is part of efforts by the ruling elite to prepare for elections in spring or summer 2022. Recent media market entrant Euronews is only notionally independent: its franchise operation in Serbia is a joint venture with the state telecoms company. Meanwhile, pressures have increased on CNN-affiliated news programme N1. Impacts Neutralising independent media outlets gives room to government-linked tabloids and private TVs to spread misinformation. Telekom Srbija’s involvement with Euronews may contravene a legal ban on state ownership of the media. Under increased pressure in the region, UG may diversify its operations further afield, having bid for RTL Lux in Luxembourg. Serbia's EU accession bid, already on hold, will be further hampered by increasing government media capture and state capture more widely.

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