The influence of state ownership on innovation in market competition

Kevin STEENSMA, Hongyan YANG

Research output: Book Chapters | Papers in Conference ProceedingsConference paper (refereed)

Abstract

We consider 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. We suggest how accounting for competitive context can disentangle these countervailing forces. Using a sample of over 240,000 Chinese firms we found that when private-sector competition was intense, state-owned firms outspent their private-sector counterparts in searching for innovative solutions through RandD expenditures. However, under similar competitive conditions, private-sector firms were markedly more successful than state-owned firms in converting these expenditures into economic value.
Original languageEnglish
Title of host publicationAcademy of Management Annual Meeting Proceedings
Pages1064-1069
Number of pages6
DOIs
Publication statusPublished - 1 Jan 2013
Externally publishedYes

Publication series

NameAcademy of Management Annual Meeting Proceedings
Number1
Volume2013
ISSN (Print)0065-0668
ISSN (Electronic)2151-6561

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STEENSMA, K., & YANG, H. (2013). The influence of state ownership on innovation in market competition. In Academy of Management Annual Meeting Proceedings (pp. 1064-1069). (Academy of Management Annual Meeting Proceedings; Vol. 2013, No. 1). https://doi.org/10.5465/AMBPP.2013.22