Title

Financial constraints and firm innovative performance : evidence from Chinese companies

Document Type

Journal article

Source Publication

Academy of Management Annual Meeting Proceedings

Publication Date

1-1-2015

Issue

2015

First Page

17488

Publisher

Academy of Management

Keywords

financial constraint, Innovation, Institution

Abstract

For a developing country undergoing economic transition like China, innovation plays an important role in optimizing the industrial structure and in improving economic growth. In general, due to the risk adverse behavior of the common investors, innovation activities often face a greater financial constraint compared to other routine activities of the firm. This study aims at examining the effect of financial constraints on firm innovative performance in the Chinese economic context. It further examines the moderating effects of state ownership and institutional environment on the relationship between financial constraints and innovative performance, using a firm level data set from 25 representative Chinese cities in 2012. The empirical results show that financial constraints do impede firms¡¯ innovative performances. Although state-owned equity has no direct effect on innovative activities, the negative effect of financial constraints on innovative performance is smaller for controlling state-owned companies than for non-state-owned counterparts. Moreover, sound institutional environment directly promotes firms' innovative activities; however, an inferior institutional environment alleviates the negative effect of financial constraints on firm innovative performance.

DOI

10.5465/AMBPP.2015.17488abstract

Print ISSN

00650668

E-ISSN

21516561

Publisher Statement

Copyright © 2015, Academy of Management

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Recommended Citation

Ren, T., Ru, J., Yang, H., & Geng, C. (2015). Financial constraints and firm innovative performance : evidence from Chinese companies. Academy of Management. Annual Meeting Proceedings, (2015), 17488. doi: 10.5465/AMBPP.2015.17488abstract