An Empirical Study On The Impact Of SMEs’ Technological Innovation To Firm Performance

SME has an important position in the national economy, which is gradually becoming the main force in the development of social productivity. SME is adaptability to market changes and has a wide operating range, but its weak capital and poor financing ability can’t be ignored. With the current international trade situation, traditional advantage which based in low-cost labor is facing a growing number of new challenges. SME should promote technological innovation strategy actively to obtain the opportunity to survive and grow. R&D is the thought source library of enterprises’ technical innovation. It is the foundation of the enterprises access to technical advantages. With the increasingly fierce international and domestic market competition, R&D is also the key of whether enterprises can survive, develop and grow in this environment. So how to enhancing the independent innovation capacity of the SME become an important subject which can promote the development and the management of technological innovation. Then, it can advance the economic growth rate of the country which lays a foundation for a leapfrog development. However, R&D investment has high risks、its revenue lags and serious information asymmetry, which makes the R&D activity a serious principal-agent problem. Reasonable corporate governance structure can effectively solve the problem of agency, which is conducive to reduce the agency cost will be beneficial to the reasonable allocation of R&D resources and promote innovation, ultimately be contributed to the value maximization and realize the sustainable development. Therefore, explore the relationship between the R&D and enterprise performance within the framework of corporate governance has an important theoretical and practical significance.The paper uses yearly reports of manufacturing firms which were listed in ShenZhen Stock Exchange from 2011 to 2013 to study the moderating effect of corporate government on the relationship between technological innovation input and firm performance. Then, the paper put forward to hypothesis based on analyzing the agent problem of R&D activity. The paper divides corporate governance variables into equity variables, the board of directors variables and managerial ownership variables. Three research methods have been used, such as normative and empirical analysis, qualitative and quantitative analysis, and systems analysis. The paper examined the hypothesis and proposed policy suggestions. The main contributions of the study are as follows:Firstly, R&D expenditure with firm performance as measured by return presents significantly positive correlation.Secondly, the largest shareholder has negative moderating effect on the relationship and has no influence on the performance.Thirdly, the salary level of the board and independent directors has no moderating effect on the relationship, but the salary level of the board directly and significantly influenced the firm performance.Fourthly, managerial ownership has positive moderating effect on the relationship, but has no influence on the performance.To perfect the governance of listed company and further improve the positive role of R&D expenditure in promoting firm performance, this paper puts forward some policy suggestions. Firstly, SME are ought to increase the R&D input and government should make effort to enhance the support strength. Secondly, corporate should optimize stock ownership structure and reduce the largest shareholder. Thirdly, the board of directors must strengthen its function and power, perfect the system of independent directors and establish incentive system of the board’s remuneration. Finally, this paper suggests that enterprises could speed up the equity incentive plan for executives.