A Study On The Relationship Between Regional Market Institutions And Enterprises’ Innovation Input

With the decline of capital investment return and the loss of labor cost advantage,China’s industrial enterprises urgently need to invest more in innovation so as to regain the competitive advantage of enterprises and enhance their competitiveness.The government has also introduced a series of policies and measures to enhance the innovation capability of enterprises.However,the statistical data shows that the innovation investment of industrial enterprises in China has not been significantly improved in recent years.What factors have an important impact on enterprise innovation input?Based on the special institutional background of China’s transition economy,this paper analyzes the influence of regional market institutions on the innovation input of Chinese enterprises.In this paper,we use the three pillars of the institution theory,which related to"regulative","normative" and "cognitive",to explain the objective constraints and subjective choices faced by enterprise innovation input.We also theoretically explain why market institutions have an important impact on enterprise innovation input.Combined with the specific characteristics of China’s market institutions,this paper puts forward the relevant research hypothesis.In the empirical stage,based on the data of Chinese industrial enterprise database(2005-2007),a panel data Tobit model is employed to analyze the impact of regional market institutions on enterprise innovation input under static and dynamic scenarios.This paper finds that:(1)the property right,which identifies SOEs and private enterprises,has a significant effect on R&D in both static and dynamic scenario;(2)in the static situation,financing discrimination and production factor price distortion have significant negative impact on R&D.However,local protection’s effect on R&D isn’t significant;(3)in the dynamic scenario,the role of the market institutions has partly changed.The acceleration of financing discrimination has a significant positive impact on R&D input,while the accelerated improvement of local protection has a significant negative impact on R&D input;(4)Finally,regional samples show that the role of financing discrimination and the price distortion of production factors in innovation input is universal in the range of China,while local protectionism play an different role in innovation input in different regional characteristics.Therefore,this paper shows that the region element should be taken into consideration when related to institutional analysis.According to the empirical results,this paper argues that:firstly,government should take the marketization as the goal,and deepen the reform in the financial system 6the sooner the better;secondly,government should take the commodity market reform as the benchmark,promote the reform of production factor markets,and gradually form a reasonable exchange market;thirdly,government should get rid of regional barriers to entry.