Research On Customer Concentration And Corporate Innovation

The 19 th National Congress of the Communist Party of China proposed innovation as the first driving force for economic development and building modern economy requiring innovation as a support.Governments at all levels should actively take measures to promote "mass entrepreneurship and innovation" and stimulate the innovation vitality and motivation of the whole people.Corporate innovation is the key to national independent innovation.Corporate innovation has decisive significance for its own sustainable development.Whether from the national level or from the corporate level,innovation is of great significance and plays an important role in economic development.Corporate innovation has always been a hot issue in academic research.At present,the factors affecting corporate innovation are divided into external factors and internal factors.External factors affecting corporate innovation include macro-environment,financial development,legal protection,market structure and so on;internal factors affecting corporate innovation include corporate characteristics,corporate governance,managerial characteristics and so on.However,previous studies have neglected the role of stakeholder ——customers in corporate innovation behavior.With the development of China’s economy,customers’ influence on the production and management activities of enterprises is becoming more and more important,which will have a profound impact on the innovation behavior of corporates.In 2012,China Securities Regulatory Commission(CSRC)revised the 《Standards for the Content and Format of Corporate Information Disclosure for Public Securities Issuance No.2-Content and Format of Annual Report》,requiring listed companies to disclose the proportion of sales of the top five customers in a summary manner,and encourage the disclosure of the names and sales of the top five customers.It can be seen that China’s regulatory agencies are paying more and more attention to customer information supervision.Mastering customer information is of great significance for preventing and defusing customer risks and promoting the healthy development of enterprises.Customers may have governance effect or risk effect on business management activities.Therefore,customer concentration,which represents the important characteristics of customer relationship,may also have two-sided effects on corporate innovation.On the one hand,when the governance effect is dominant,customer concentration will promote corporate innovation.Customer concentration can realize supply chain integration,information sharing and increasing specific investment to stimulate enterprise innovation power,promote enterprises to increase innovation investment and improve innovation performance.On the other hand,when the risk effect is dominant,customer concentration will inhibit corporate innovation.Customer concentration will lead to lower profit margin,higher risk,higher financing cost and lower access to heterogeneous resources,result in insufficient innovation motivation and restrain innovation investment,thereby reducing innovation performance.Therefore,whether customer concentration has an impact on corporate innovation and which effect is dominant is a question to be tested.On the basis of summarizing the relevant literature,this paper will focus on the following questions:(1)Will customer concentration affect the level and intensity of innovation input? Governance effect and risk effect which side is dominant ?(2)When supply chain integration effect and bargaining power are different,does customer concentration have different effects on corporate innovation?(3)If customer concentration restrains on corporate innovation,will business risk be the intermediary channel that affects the relationship between them? In addition to the intermediary channel of business risk,are there any other intermediary channels? Conversely,if customer concentration promotes corporate innovation,what is the intermediary channel between them?(4)When there are differences in institutional environment,market competition,corporate characteristics,customer information disclosure and other factors,will the impact of customer concentration on corporate innovation show different results?This paper studies the impact of customer as an important stakeholder on corporate innovation from the perspective of customer concentration on behalf of customer relationship.Firstly,this paper discusses the impact of customer concentration on the level and intensity of corporate innovation investment,and further tests the effect of supply chain integration and bargaining power on the relationship between them.Secondly,it empirically studies the mechanism by which customer concentration affects the level and intensity of corporate innovation investment by influencing business risk and financing constraint.Finally,it empirically examines the moderating effect of customer concentration on corporate innovation when there are differences in institutional environment,market competition,internal control and diversification,and details of customer information disclosure.The main findings of this paper are as follows:First,the impact of customer concentration on corporate innovation.The results show that: Firstly,customer concentration significantly inhibits corporate innovation,and after the robustness test,this conclusion is still valid.Among them,customer concentration is measured by three dimensions: the first major customer sales proportion,the sum of the top five customer sales proportion and the Herfindahl index of the top five customer sales proportion;corporate innovation is measured by two dimensions: innovation investment level and innovation investment intensity;secondly,the paper further analyzses the impact paths of customer concentration on corporate innovation.Customer concentration influences innovation behavior through the two pathes of supply chain integration and bargaining power.Specifically,the effect of supply chain integration is measured by the proportion of accounts receivable and the turnover rate of inventory,and the bargaining power of corporates is measured by the scale of enterprises and the nature of property rights.The results show that: compared with the poor integration of supply chain,the better integration effect of supply chain,the weaker inhibition of customer concentration on the level and intensity of corporate innovation investment;compared with the weaker bargaining power,the stronger bargaining power,the weaker inhibition of customer concentration on the level and intensity of corporate innovation investment.To some extent,the impact of customer concentration on corporate innovation behavior is explained through the two influence paths of supply chain integration effect and bargaining power.Second,the impact mechanism of customer concentration on corporate innovation.On the basis of empirical analysis of the impact of customer concentration on corporate innovation,and based on Wen Zhonglin’s intermediary effect test model,this paper further studies the mechanism of customer concentration on corporate innovation.Firstly,this paper empirically analyses the impact of customer concentration on business risk,and then studies the mechanism of the impact of business risk on corporate innovation.Business risk is measured by sales revenue volatility and profitability volatility.The research shows that customer concentration not only increases the business risk of corporates,but also inhibits the level and intensity of innovation input through business risk.It also inhibits the quantity and quality of innovation output.Therefore,customer concentration partly inhibits corporate innovation through business risk.In further analysis,this paper also examines whether customer concentration restrains corporates innovation through the intermediary of financing constraint.The research finds that customer concentration increases the degree of financing constraint of corporates,and customer concentration does restrain the level and intensity of innovation investment through financing constraint.We conclude that customer concentration has a negative effect on corporate innovation through two intermediaries: businessl risk and financing constraint.Third,the moderating effect in the relationship between customer concentration and corporate innovation.This paper empirically examines whether there is heterogeneity in the impact of customer concentration on corporate innovation when institutional environment,market factors,enterprise characteristics,customer information disclosure and other factors significantly affecting the enterprise strategic choice and financial decision-making are different.The results show that when government intervention is less and legal environment is better,market position is higher and market competition is lower,internal control of enterprises is better and diversification is adopted,the negative significant relationship between customer concentration and innovation investment level and intensity can be alleviated to a certain extent.Further research shows that when the customer information disclosure is more detailed and the customer relationship is more stable,the negative significant relationship between customer concentration and innovation input level and innovation input intensity can be alleviated to a certain extent.The research innovation of this paper is mainly reflected in the following aspects:Firstly,the existing literature mainly discusses the factors affecting corporate innovation from the external factors and internal factors,while the external factors mainly focus on macro-environment,financial development,legal protection,market structure,capital market pressure and other aspects,relatively ignoring the impact of non-financial stakeholders-customers on corporate innovation behavior.Based on the customer concentration,which represents the important characteristics of customer relationship,this paper extends the research on the influencing factors of corporate innovation in China horizontally and enriches the relevant literature.Secondly,the existing customer literature mainly takes American listed companies as research samples,but there are few studies on this aspect in China,especially on the impact of customer relationship on corporate innovation.Based on the significant differences in the level of economic development and institutional background between China and the United States,this paper takes the data of Listed Companies in China as a sample,not only explores whether customer concentration will affect corporate innovation behavior,but also reveals the paths of customer concentration affecting corporate innovation.The results show that supply chain integration effect and bargaining power are two paths that influence customer concentration on corporate innovation.In this paper,customers and suppliers are integrated into the overall framework of the supply chain,which deepens the research on the relationship and behavior between upstream and downstream suppliers and customers in the supply chain.Thirdly,it fully reveals the mechanism of customer concentration on corporate innovation.This paper comprehensively combs and integrates the mechanism of customer impact on corporate innovation behavior,systematically and deeply studies how customer concentration affects corporate innovation through business risk,and further confirms that financing constraint also plays a part of intermediary effect in the relationship between them.It clarifies the function mechanism of customer concentration on corporate innovation.From the macro level to the micro level,this paper comprehensively analyses the moderating effect of customer concentration on corporate innovation.