Research On The Effect Of Common Ownership On Corporate Innovation

In recent years,China is gradually stepping into a new stage of innovation-driven high-quality development,and the strength of technological innovation to support socioeconomic development has been increasing.Data released by the National Bureau of Statistics show that by the end of 2020,China’s R&D investment had reached 2442.6billion,accounting for 2.4% of GDP and ranking second in the world.Technological innovation has become an important means for enterprises to gain competitive advantage and achieve value preservation,especially as the current market competition is becoming increasingly fierce,enterprises urgently need to expand their business territory through R&D innovation and further enhance their international competitiveness.How to effectively stimulate enterprises’ willingness to R&D and enhance their innovation ability has become a hot topic of common concern in practice and academia.However,R&D activities are characterized by high risk,high investment,and long cycle time,which drive companies to promote R&D cooperation with other companies in their innovation activities.Common ownership facilitates the flow of information and resources between firms and forms tight networks based on ownership-level ties.Such linkages alleviate the competitive pressure among firms in the same industry and provide a favorable channel for the formation of stable cooperative relationships among firms.Then,can the extent to which common ownership alleviates inter-firm competition influence firms’ innovation decisions and thus enhance their innovation input,innovation output,and innovation efficiency? It is of great theoretical and practical significance to conduct research in this area.To this end,based on corporate innovation theory,shareholder supremacy theory,social capital theory,and principal-agent theory,this thesis manually collects and organizes data on common owners of A-share listed companies in Shanghai and Shenzhen from 2009 to 2020,constructs common owners measurement indexes from two dimensions of shareholder number and shareholding ratio,and conducts theoretical explanation,data analysis and validation on the relationship between common ownership and corporate innovation and the mechanism of influence.The study results show that: first,the common owners promote the innovation investment of enterprises.The mechanism of action analysis finds that common ownership influences corporate innovation investment through three paths: financing constraints,information transparency,and shareholder monitoring.Heterogeneity analysis finds that the positive effect of common ownership on innovation investment is more significant in high-tech industries,regions with a higher degree of marketization,and non-state enterprises.Within a certain range,the greater the degree of information advantage or linkage of common owners,the more innovation investment of enterprises.Secondly,firms played the role of synergistic governance of common owners,which significantly increased innovation output.As for the mechanism of action,common owners influence innovation output through two channels: shareholder monitoring and innovation input.Further,the contribution of common owners to innovation output is more pronounced in high-tech industries and firms in highly competitive markets.Shareholder reduction control enhances the positive effect of common ownership on firms’ innovation output.Comparatively,the effect of non-cooperative common ownership on innovation output is insignificant.The greater the threat of exit of common owners,the greater the innovation output of the firm.Third,firms enhance innovation efficiency by the corporate governance advantages of common owners.Concerning the mechanism of action,common owners enhance firm innovation efficiency through three channels: shareholder monitoring,agency costs,and product market collaboration.Further,the effect of common owners on innovation efficiency is more pronounced in more market-oriented regions and highly competitive firms.Compared with transactional common owners,stable common owners have a more significant effect on innovation efficiency.Within a certain range,the larger the scope of the common ownership network,the higher the innovation efficiency of the firm.Fourth,firms use common owners to enhance their substantive innovation capability and the quality of innovation output and thus realize value creation.Common owners have a significant role in promoting both substantive and strategic innovation,and relatively speaking,common owners have a greater role in promoting substantive innovation.In addition,common owners also have a significant effect on the quality of innovation output.Based on the above study,the following policy recommendations are obtained: First,enterprises should give full play to the corporate governance advantages of common owners to promote corporate innovation.Specifically,enterprises should make full use of the advantages of common owners in technical support,information access,and professionalism to establish a long-term mechanism of competitive advantage and achieve long-term healthy development of enterprises by promoting technological innovation and optimizing resource allocation.Especially for non-state enterprises with strong R&D willingness,it is more important to play the role of "bridge" between the common owners and actively seek R&D partners to further enhance the independent innovation capability of non-state enterprises.The positive effect of common owners on enterprise innovation is more obvious in regions that are more affected by shareholder shareholding reduction control and higher marketization level.Based on this,enterprises should pay close attention to government policies and industry dynamics,and grasp the policy dividend to promote corporate technological innovation.For enterprises with fierce market competition,they should bring into play the effect of common owners to mitigate competition and conflict,and enhance R&D cooperation among enterprises in the same industry,so as to obtain excess returns in the fierce market competition.Secondly,enterprises should distinguish different types of common owners and improve their innovation strategies in a targeted manner.Enterprises should pay attention to and bring into play the synergistic governance effect of stable common owners to reduce the agency conflict between shareholders and management and enhance the innovation capability of enterprises.In addition,there is no significant effect of non-identical common owners on the innovation output of enterprises.When the higher the degree of common ownership is,the more chance the enterprise has to be in a relatively advantageous position in the network,the enterprise should give full play to its advantage of control over key and scarce resources to coordinate the resources and information required for enterprise innovation and further promote enterprise innovation.In addition,enterprises should fully exploit the value of this weakly connected network,effectively manage and improve network resources,and provide heterogeneous information for enterprise innovation activities.Overall,enterprises should improve corporate innovation strategies according to the characteristics of different types of common owners in a targeted manner to give full play to the unique advantages of heterogeneous common owners and help the long-term development of enterprises.Thirdly,enterprises should actively seek R&D cooperation between common owners who also serve as enterprises to build an innovation ecosystem for sustainable development.In the increasingly open market environment,the boundaries of enterprises are permeable,enterprises should avoid "closed-door",through the extensive absorption of innovative ideas from other enterprises,strengthen the close cooperation and synergistic innovation effect between enterprises,absorb and integrate internal and external innovation resources,to further form the innovative advantages and core competitiveness of enterprises.In addition,in the face of the rapidly changing market environment and industry dynamics,enterprises should bring into play the information advantages of the common owners,strengthen information transfer,timely identification of market opportunities,create more high-quality products in line with the market,combined with the resource advantages of the common owners,and strive to maximize the innovation output into excess revenue,to establish a solid foundation for the sustainable competitive advantage of enterprises.The innovations of this thesis are: firstly,new evidence on the influence of equity governance on corporate innovation is found.Most of the current studies on equity structure focus on the study of single equity characteristics,and there is a lack of literature examining shareholder network linkages.However,the fact is that there are often links between firms in the same industry where there are common owners,and their interactions may have an important impact on firm innovation.Second,it expands the research on the corporate governance effects of common owners.At present,academic research has paid less attention to how the linkage established between common owners in the same industry affects corporate goals and behavior.Some scholars have explored the effects of common ownership on investment efficiency,surplus management,corporate tax avoidance,and comparability of accounting information from different perspectives.Unlike the above studies,this thesis conducts an empirical analysis based on Chinese data and finds that common ownership can promote corporate innovation,and further analyzes the impact of own nature on the relationship between common ownership and corporate innovation.Third,it enriches the research related to different types and characteristics of common owners.More studies have been conducted to explore the economic consequences of common ownership based on a single characteristic of common owners in the same industry,while fewer studies have been conducted to compare non-cooperative common owners with other characteristics.In this thesis,we investigate the impact of non-same industry common owners on corporate innovation and classify common owners into two types: stable common owners and transactional common owners,to distinguish the heterogeneous impact of different types of common owners on corporate innovation.In addition,this thesis also examines the influence of common owners on firm innovation based on the dimensions of information advantage,linkage degree,and network scope.A more comprehensive measure of common owners from different characteristic dimensions is more suitable for the Chinese institutional background and organizational structure setting,which is an important reference for regulating and guiding the behavior of common owners.