Informal institution and corporate innovation: From the perspective of social trust

2021 ◽  
pp. 2142005
Author(s):  
Ling Zhao ◽  
Huang Hao
Keyword(s):  
Social Trust ◽  
Patent Application ◽  
Influence Factors ◽  
Innovation Activity ◽  
Firm Innovation ◽  
Informal Institution ◽  
Informal System ◽  
Corporate Innovation ◽  
Innovation Output

Purpose: This study examines how social trust, as an informal institution, creates a cooperative and honest atmosphere to improve managers’ willingness for firm innovation. This study also addresses that the informal system may substitute for the formal institutions in promoting corporate innovation. Design/methodology/approach: This study opts a sample of Chinese listed firms over the period of 2007–2014. We obtain the detailed patent application information from the official website of China Patent and Intellectual Property Office. The social trust information is based on the results of Chinese Enterprise Survey System. Findings: The results indicate that firms located in regions of high social trust tend to have more innovation output, and is robust to a battery of sensitivity tests. The authors further document that this effect is more pronounced for firms with poor short-term financial performance, which are located in regions with weak legal environments and firms having lower information transparency. In addition, the authors also demonstrate that social trust can help firms to get adequate funds to reduce financial pressure and encourage firms to pay more attention to long-term benefits, alleviating investors as well as management myopia. Research limitations/implications: Limited by the data sources, when measuring innovation activity, the authors only use patent numbers represent for innovation output. Then, this study measures the patent quality through classifying patent categories (invention patent or others), since in China, the citation data are imperfect and inadequate. Practical implications: The results suggest that social trust means a good culture of honesty and cooperation can promote firm’s innovation engagement. Especially, in emerging markets, where formal mechanisms are relatively less effective, informal institutions can serve as an alternative system for alleviating information asymmetry. Originality/value: This study contributes to the literature in two ways. First, this study finds the positive effect of social trust on corporate innovation, which provides a new perspective for deepening the understanding of the influence factors of innovation. Second, this study further clarifies the mechanism of social trust promoting firm innovation, indicating that social trust can effectively alleviate outsiders’ concern about moral hazard risk. Then the stakeholders are more willing to provide financial support and pay more attention to the firm’s long-term performance.

scholarly journals Religion and Corporate Innovation

2018 ◽  
Vol 4 (1) ◽  
pp. 81
Author(s):  
Meng Wang ◽  
Lining Gan
Keyword(s):  
Inhibitory Effect ◽  
Promotion Effect ◽  
Positive Correlation ◽  
Informal System ◽  
Financial Position ◽  
Input And Output ◽  
Corporate Innovation ◽  
Innovation Ability ◽  
The Impact

Innovation ability is an important factor to measure firms’ strength and is vital to the long-term development of the enterprises, previous studies have shown that financial position and corporate governance can have effects on corporate innovation, but put little attention on the informal system which may influence on innovation. This article selects religion as one of the informal system and tries to explore the impact of religion on the innovation input and output of enterprises. Using the data of A-sh are listed companies from 2008 to 2015, the empirical results show that there is a significantly positive correlation between religion and innovation inputs and outputs, and this positive correlation between religion and innovation is negatively regulated by the politics and marketization index. The results prove that politics and marketization index are substitution of religion on corporate innovation. In further analysis, the religion is divided into eastern and western parts, the results show that both eastern and western religions can promote corporate innovation, but the promotion effect of western religions is stronger. Negative moderating effect of political and marketization index on the positive correlation between religion and innovation still exists, and basically showing a more forceful inhibitory effect made by western religions on corporate innovation.

scholarly journals Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance

2021 ◽  
Vol 13 (9) ◽  
pp. 5044
Author(s):  
Hideaki Sakawa ◽  
Naoki Watanabel
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Innovation Activity ◽  
Board Members ◽  
Publicly Traded ◽  
Family Control ◽  
Corporate Innovation ◽  
Main Bank ◽  
Publicly Traded Firms

This study investigates the effects of family control on corporate innovation activity in publicly traded firms in Japan under stakeholder-oriented corporate governance. In a sample of 14,991 firm-year observations in publicly traded firms in Japan during the period 2007 to 2016, we tested whether family owners or board members are enhancing research and development investments. While theoretical perspectives of principal–principal conflicts generally assume a negative relationship between family control and research and development intensity, we find a positive relationship, which supports the stewardship theory perspective. Additionally, we find that main bank ownership positively moderates the relationship between family control and research and development, suggesting that the main bank could affect the decision-making of family board members in the long-term. This result is supported by the close relationships between the main bank and client firms. Furthermore, our study reveals that the shareholder orientation of foreign shareholders suppresses family board members’ long-term orientation. We conclude that the exploitation presumed by principal–principal conflict perspectives has not been thoroughly investigated in Japan’s stakeholder-oriented corporate governance system.

scholarly journals Do Long-Term Natural Disasters Influence Social Trust? Empirical Evidence from China

2021 ◽  
Vol 18 (14) ◽  
pp. 7280
Author(s):  
Yao Li ◽  
Haoyang Li ◽  
Jianqing Ruan
Keyword(s):  
Natural Disasters ◽  
Natural Disaster ◽  
Social Trust ◽  
Geographical Location ◽  
Household Survey ◽  
Flood Frequency ◽  
Psychological Characteristics ◽  
The North ◽  
The Impact

The natural environment is one of the most critical factors that profoundly influences human races. Natural disasters may have enormous effects on individual psychological characteristics. Using China’s long-term historical natural disaster dataset from 1470 to 2000 and data from a household survey in 2012, we explore whether long-term natural disasters affect social trust. We find that there is a statistically significant positive relationship between long-term natural disaster frequency and social trust. We further examine the impact of long-term natural disaster frequency on social trust in specific groups of people. Social trust in neighbors and doctors is stronger where long-term natural disasters are more frequent. Our results are robust after we considering the geographical difference. The effect of long-term natural disasters remains positively significant after we divide the samples based on geographical location. Interestingly, the impact of long-term flood frequency is only significant in the South and the impact of long-term drought frequency is only significant in the North.

Social trust, norms and morality

Human Affairs ◽  
2013 ◽  
Vol 23 (3) ◽  
Author(s):  
Miroslav Popper
Keyword(s):  
Social Capital ◽  
Political Institutions ◽  
Social Trust ◽  
Local Level ◽  
Dynamic Change ◽  
Short Term ◽  
Legal Norms ◽  
Increased Sensitivity ◽  
The Individual

AbstractThe article approaches the topic of social trust from an evolutionary perspective. It begins by summarising the most influential approaches that have defined specific and social trust and ascertains what causes differences in degrees of trust and how the potential risk of deception might be lowered. It then notes that the basis of morality had already been formed during the era of prehistoric man, who was able to create coalitions against aggressors and to socially control the behaviour of deviants. It points out, however, that having a certain predisposition to behaving cooperatively or an increased sensitivity to recognising and not tolerating behaviour aimed at abusing cooperation is not a sufficient guarantee of the fact that people will always (or at least in the majority of situations) favour cooperation over deception. One of the reasons for this is a tendency to favour short-term gains over long-term ones. The article argues that establishing norms (moral, social and legal) produces a higher level of social trust because it not only “encourages” individuals to behave in certain ways in particular situations but also works as a sanction which “discourages” the individual from socially deviant behaviour. The article then focuses on a debate about the causal relationship between social trust and social capital. It discusses the suggestion that political institutions, government and the judiciary may reduce rather than raise levels of social capital and consequently also the level of social trust. This is partly because of their powerful position and the consequent scope for corruption and partly because of the fact that even when attempting to act honestly, representatives of these institutions cannot sufficiently reflect upon dynamic change at the local level. Finally, the article ends by adopting the position that social trust is built primarily from bottom up and so it is risky to continually doubt the very existence and usefulness of social norms and morality and to be governed simply by legal norms.

She-E-Os and innovation: do female CEOs influence firm innovation?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hafiz Mustansar Javaid ◽  
Qurat Ul Ain ◽  
Antonio Renzi
Keyword(s):  
Financial Constraints ◽  
Ordinary Least Squares ◽  
State Ownership ◽  
Corporate Environment ◽  
Firm Innovation ◽  
Content Type ◽  
Innovation Activities ◽  
Female Ceos ◽  
Innovation Output ◽  
The Impact

PurposeThis paper empirically investigates whether female CEOs (She-E-Os) have an effect on firm innovation among Chinese listed firms based on patent data. This study also delved further by looking at whether the internal corporate environment moderates the effect of female CEOs on innovation, that is, state ownership. Finally, this study investigates an additional test of financial constraints to examine whether financial constraints also moderate the impact of female CEOs on firm innovation.Design/methodology/approachThis study used the data of all A-share listed companies on the Shanghai and Shenzhen stock exchanges for the period from 2008 to 2017. The authors use ordinary least squares regression as a baseline methodology, along with firm-fixed effect, lagged measure of female CEOs, alternative measures of innovation, Heckman two-step model and negative binomial regression to check and control the possible issue of endogeneity.FindingsThe authors’ findings show that CEO gender plays an important role in producing higher levels of innovation output by improving the governance structure. However, female CEOs have no effect on state-owned enterprises' (SOEs) innovation activities, which suggests that the main goal of SOEs is achieving sociopolitical objectives. Furthermore, female CEOs' influence on innovation output is weaker in firms with financial constraints.Social implicationsThis study adds to the emerging global discussion on gender diversity. Many legislative bodies require a quota for women on corporate boards due to gender inequality. This study's findings reinforce such guidelines by emphasizing the economic benefits of including women in top management positions.Originality/valueThis study provides new insights by highlighting the role of female CEOs in increasing firms' innovation activities. Additionally, this study provides evidence on whether the internal corporate environment (state ownership and financial constraints) moderates female CEOs' effect on innovation.

Modeling the efficiency of project management of corporate innovation activity

2021 ◽  
Author(s):  
Idelya Badykova
Keyword(s):  
Project Management ◽  
Organizational Effectiveness ◽  
Positive Relationship ◽  
Innovative Activity ◽  
Innovation Activity ◽  
Innovative Development ◽  
Russian Economy ◽  
Corporate Innovation ◽  
Corporate Social

The role of innovation in the economy development is extremely significant. Within the framework of this work, the innovative activity of enterprises and its relation to corporate social responsibility (CSR) is of particular interest. This study is aimed at modeling the project management of corporate innovation activity on the basis of CSR. The results obtained by the author for the Russian economy suggest that there is a positive relationship between the level of innovative development and CSR, both in general and in terms of investments in the transformation of human capital. In this regard, the model of project management of corporate innovation activity based on CSR is proposed. Author suggests, that this model's implementation for companies is promising, since transition to such a model should be resulted in an increase in the innovation activity of companies, regions and the whole country, as well as an increase in the economic, social and organizational effectiveness of innovative activity.

Capital Account Liberalization and Firm Innovation: Worldwide Evidence

2021 ◽  
pp. 0148558X2110594
Author(s):  
Fangfang Hou ◽  
Xinpeng Xu
Keyword(s):  
Positive Impact ◽  
Set Covering ◽  
Capital Account ◽  
Legal Environment ◽  
Firm Level ◽  
Firm Innovation ◽  
Capital Account Liberalization ◽  
Data Set ◽  
Innovation Output

This study investigates whether capital account liberalization, a leading characteristic of globalization, is associated with firms’ future innovation output. Employing a novel firm-level panel data set covering 41 countries over two decades, we show that capital account liberalization is significantly associated with higher corporate patenting activities, particularly for firms from innovation-intensive industries. Further analyses show that the effect is stronger among firms from economies in a better legal environment, signifying the important role of good institutional quality in facilitating the positive impact of liberalization. The effect is also stronger among firms with higher initial productivity, consistent with the “productivity” hypothesis, according to which bigger and more productive firms generate more innovation after liberalization. Our findings are robust to the use of various measurements, subsamples, and estimation models. This study provides global firm-level evidence of the real economic impact of financial globalization.

Corporate Governance and Firm Innovation

2020 ◽  
pp. 155-181
Author(s):  
Mario Ossorio
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Institutional Ownership ◽  
Board Structure ◽  
Firm Innovation ◽  
Theoretical Perspectives ◽  
Key Factor ◽  
Relevant Variables ◽  
D Investment

Innovation is a key factor for firms' competitive advantage in the long-term and for their financial success. Scholars highlight the underinvestment problem with respect of R&D investment. This chapter focuses on two relevant variables of corporate governance that influence firms' innovation performance: firm ownership and board of directors. In the first section, the effect of ownership structure on R&D investment is analyzed. More specifically, the chapter will illustrate the effects of family ownership and institutional ownership on innovation investments. The second section explores the main theoretical perspectives investigating the functions of board of directors and the main board tasks. Lastly, three attributes of board structure and their effect on R&D investments are explored.

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