Research On The Impact Of Institutional Transaction Costs On Enterprise Innovation

Internationally,the world today is undergoing “major changes unseen in a century”.A new round of scientific and technological revolution and industrial transformation at the productivity level is reshaping the global economic structure and reconfiguring the global innovation map.China is also experiencing the historic convergence of the international situation and the structural deceleration of domestic economic development,and China’s economic development model has shifted from high-speed growth to high-quality development.In order to cope with the increasingly fierce great power game and international competition in the major changes unseen in a century,China is deepening the supply-side structural reform,accelerating the formation of a new development pattern with the domestic cycle as the main body and the domestic and international double cycle promoting each other.Innovation is an important driving force for China to smooth the domestic cycle in the new period,and it is also a key variable for China to win the initiative and seize the first opportunity in the international cycle.The report to the 20 th National Congress of the Communist Party of China emphasized that “technology is the primary productive force,talent is the primary resource,and innovation is the primary driving force,” highlighting the core role of innovation in China’s modernization.Enterprises are the main drivers of technological innovation and the vanguards of creative advances.However,Chinese enterprises face challenges such as rising factor costs,declining profit margins,difficulties in transformation and upgrading,and insufficient innovation incentives and motivation.At the end of 2015,the Central Economic Work Conference proposed adopting a“combination punch” approach to reduce the operating costs of the real economy.Reducing institutional transaction costs and optimizing the business environment have become important measures to alleviate the burdens on market entities and stimulate market vitality,which has gained widespread attention from the government,enterprises,the public,and other stakeholders and has had an undeniable impact on the production and operational activities of enterprises.Then,under the new development pattern,how will institutional transaction costs affect enterprise innovation? What is the pathway of this impact? What role do informal institutions play in institutional transaction costs affecting enterprise innovation? In a broader spatial dimension,how does the impact of institutional transaction costs on enterprise innovation change?To explore the answers to the above questions,this paper first systematically reviews existing literature and relevant theories.Based on establishing a theoretical model and mathematical deduction,it constructs a three-layer theoretical analytical framework to deeply interpret the effects of institutional transaction costs on enterprise innovation from a theoretical logical perspective.On the first level,based on the national theory of new institutional economics,this paper explains the overall impact of institutional transaction costs on enterprise innovation,and further analyzes three paths through which institutional transaction costs affect enterprise innovation,namely,the path of enterprise entry and exit,the path of enterprise financing constraint and the path of entrepreneurship.On the second level,based on the theory of institutional embeddedness,the non-linear influence of institutional transaction costs on enterprise innovation under the participation of informal institutions is deeply analyzed.On the third level,this paper analyzes the spatial impact of institutional transaction costs on enterprise innovation based on the spatial spillover expansion of institutions.Furthermore,this paper constructs a comprehensive index system from five aspects: the degree of government intervention in the economy,the degree of interference in factor markets,the level of intellectual property protection,the rule of law,and the cost of public facilities and services.It uses the entropy method to measure institutional transaction costs in China’s 31 provinces(direct-controlled municipalities and autonomous regions)from 2008 to 2021.The paper employs the Dagum Gini coefficient decomposition method,Moran index,and Kernel density estimation method to analyze the regional differences,spatial distribution,and dynamic evolution characteristics of institutional transaction costs in China from both spatial and temporal dimensions.Finally,based on the three-layer theoretical framework,this paper constructs a panel fixed-effects model,a panel threshold model,and a spatial Durbin model respectively to empirically test the overall impact of institutional transaction costs on enterprise innovation,as well as its pathways,non-linear effects under informal institution participation,spatial effect,as well as its decomposition.The main conclusions are as follows:Firstly,the connotation of institutional transaction costs and the regional differences,spatial distribution,and dynamic evolution characteristics of institutional transaction costs in China.The paper believes that institutional transaction costs are the non-production costs that microeconomic entities such as enterprises incur in the process of complying with various public institutions,regulations,and policies formulated and implemented by the government.This includes explicit institutional transaction costs caused by taxes,administrative charges,etc.,as well as implicit institutional transaction costs such as rent-seeking costs,opportunity costs,sunk costs,litigation costs,and risk prevention costs incurred by enterprises in dealing with the government and relevant departments.As for regional differences,there is a significant gap in the level of institutional transaction costs among provinces in China.The differences within the eastern,central,and western regions are gradually increasing,and the regional disparities are the fundamental reason for the significant differences in institutional transaction costs.Regarding spatial distribution,the level of institutional transaction costs in China’s 31 provinces(direct-controlled municipalities and autonomous regions)exhibits spatial autocorrelation,showing a pattern of “high-high agglomeration” and “low-low agglomeration”.There is a strong correlation and interaction between the levels of institutional transaction costs among provinces(direct-controlled municipalities and autonomous regions).In terms of dynamic evolution,the level of institutional transaction costs in China shows a fluctuating decline during the observation period,with a clear trend of expanding absolute differences.Secondly,the overall impact of institutional transaction costs on enterprise innovation and its pathways.Institutional transaction costs have a significant negative impact on enterprise innovation,with higher institutional transaction costs leading to lower levels of enterprise innovation.This negative impact has a certain persistence as institutional transaction costs continue to restrain the innovation level of enterprises in the current year and the next two years.The pathways through which institutional transaction costs affect enterprise innovation are enterprises’ entry and exit pathway,the financing constraint pathway,and the entrepreneurial spirit pathway.Additionally,the impact of institutional transaction costs on enterprise innovation exhibits heterogeneity in terms of spatial regions,firm property rights,and patent types.Thirdly,the non-linear effects of institutional transaction costs on enterprise innovation under the participation of informal institutions.The inhibitory effect of institutional transaction costs on enterprise innovation exhibits non-linear characteristics influenced by the level of informal institutional embeddedness.There is a threshold effect with the informal institution level as the threshold variable.The strength of the impact of institutional transaction costs on enterprise innovation depends on the value range of the informal institutional environment.When the informal institutional environment is relatively favorable,the negative impact of institutional transaction costs on enterprise innovation is relatively small.However,when the informal institutional environment deteriorates to a certain extent,the negative impact of institutional transaction costs on enterprise innovation becomes more pronounced.Furthermore,the non-linear effects of institutional transaction costs on enterprise innovation under informal institution participation show regional heterogeneity and patent type heterogeneity,while there is no firm property rights heterogeneity.Fourthly,the spatial impact of institutional transaction costs on enterprise innovation and its decomposition effects.First of all,enterprise innovation exhibits spatial autocorrelation.From 2008 to 2021,the innovation levels of 31 provinces(direct-controlled municipalities and autonomous regions)in China show significant agglomeration in spatial distribution,and there is a significant positive spatial spillover effect between regions.Then,a significant spatial relationship exists between institutional transaction costs and enterprise innovation.On the one hand,institutional transaction costs have a direct effect on enterprise innovation,and higher institutional transaction costs in a region have a significant negative impact on the innovation level of that region.On the other hand,there is a significant positive spatial spillover effect of institutional transaction costs.The institutional transaction costs in neighboring regions have a positive transmission effect on the innovation level of a given region.Lastly,the direct effect of institutional transaction costs on enterprise dual innovation exhibits heterogeneity,but there is no heterogeneity in the indirect effects.Compared to existing research,this paper’s marginal contributions mainly manifest in three aspects:First,it provides an innovative research perspective.Few studies in the academic field directly explore the impact of institutional transaction costs on enterprise innovation.This paper innovatively integrates the two concepts into the same analytical framework.It theoretically interprets and empirically tests the overall impact of institutional transaction costs on enterprise innovation,as well as its pathways,nonlinear effects under informal institutions participation,and spatial effects and their decomposition.This fills a research gap and extends the dimensions of research in related fields.Second,it offers innovative research content.The existing research can’t fully reveal how the institutional transaction cost will affect enterprise innovation.This paper not only theoretically analyzes and empirically tests the three pathways through which institutional transaction costs inhibit enterprise innovation,but also innovatively introduces the informal institutional perspective into the analysis framework of the impact of institutional transaction cost on enterprise innovation,and further expands the impact of institutional transaction cost on enterprise innovation to the spatial level for in-depth discussion.Third,the innovation in the application of research methods.At present,the academic circles are still very short of quantitative research results on institutional transaction costs and their economic effects.This paper calculates the level of provincial institutional transaction costs in China from 2008 to 2021 using an entropybased comprehensive index system.It conducts an in-depth analysis of regional differences,spatial distribution,and dynamic evolution characteristics of institutional transaction costs using Dagum’s Gini coefficient decomposition method,Moran index,and Kernel density estimation method.Based on this,the paper uses panel fixed-effects models,panel threshold models,and spatial Durbin models to empirically test the effects of institutional transaction costs on different levels of enterprise innovation.This enriches the quantitative research results on institutional transaction costs and their economic effects.This paper provides a theoretical basis and empirical evidence for China’s continuous deepening of the “streamlining administration,delegating powers,and improving regulation and services” reform,maximizing the innovation vitality of enterprises,fully implementing the innovation-driven development strategy,smoothing the domestic circulation,seizing the opportunities in the international circulation,and achieving the dynamic balance in the new development pattern and high-quality economic development at an early date.