Title

The influence of state ownership on innovation in market competition

Document Type

Journal article

Source Publication

Academy of Management Annual Meeting Proceedings

Publication Date

1-1-2013

Issue

2013

First Page

1064

Last Page

1069

Publisher

Academy of Management

Keywords

competition, Innovation, state ownership

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 R&D expenditures. However, under similar competitive conditions, private-sector firms were markedly more successful than state-owned firms in converting these expenditures into economic value.

DOI

10.5465/AMBPP.2013.22

Print ISSN

00650668

E-ISSN

21516561

Publisher Statement

Copyright © 2013, Academy of Management

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Recommended Citation

Yang, H., & Steensma, K. (2013). The influence of state ownership on innovation in market competition. Academy of Management. Annual Meeting Proceedings, (2013), 1064-1069. doi: 10.5465/AMBPP.2013.22