The Impact Of Cross-ownership On Corporate Innovation And Its Mechanism

As the report to the Party’s 20 National Congress clearly points out,"We must persist in the core status of innovation in our country’s overall modernization drive." As the most important market supplier,Enterprises are the core subject of carrying out innovative activities.General Secretary Xi Jinping also emphasized that "The core technology with independent intellectual property rights is the ‘foundation of life ’of the enterprise." Improving the level of enterprise innovation and promoting high-quality economic development has always been the focus of scholars’ research.In the past,the research perspective of corporate innovation was multiple,mainly focusing on the three levels,as Managers’ characteristics,corporate governance and external system environment.However,as the cooperation between enterprises is becoming more closely,network relationships,as one of the important factors that affect corporate innovation,have begun to receive widespread attention from scholars.Unfortunately,Existing literature pays more attention to social network relations,such as directors’ networks,alumni relations,and strategic alliances,and ignores the impact of network relations between shareholders on corporate innovation.In fact,in the capital market,the economic relationship between enterprises through cross-ownership is particularly common.Some investors will choose to invest in a number of companies at the same time to form investment portfolios to enhance overall returns.These widespread cross-ownership are important ways to establish associations between enterprises,and they are important links in the information exchange of capital markets.They may have a significant impact on enterprise innovation.Theoretically,cross-ownership may have a positive and negative role in corporate innovation.On the one hand,cross-ownership have rich information resources,which can accelerate the information exchange of enterprises to promote enterprise cooperation.On the other hand,cross-ownership may conspire to maximize the value of investment portfolios,reduce market competition,and then is not conducive to corporate innovation.It can be seen that based on theoretical analysis,it is not clear whether the cross-ownership are a positive role in corporate innovation,or a negative factor,which requires empirical inspection to obtain further conclusions.Based on this,this article tests the impact of cross-ownership on corporate innovation through empirical methods,and further discuss its mechanism and economic consequences.This not only expands the related research of crossownerships,but also has important practical significance for further improving the level of corporate innovation and optimizing the corresponding regulatory measures.Based on the theory of social network relations,this article combines the theory of commissioning agency theory and resource dependence,and selects the listed company of the Chinese A-share non-financial industry from 2007 to 2020 as a sample.By organizing the cross-ownerships data,this paper deeply analyzes the impact of crossownerships on enterprise innovation,heterogeneity,specific mechanism and economic consequences.Empirical inspection found that,(1)Cross-ownership can promote corporate innovation,and in the region where the enterprise is located,when the worse legal system environment,the higher the degree of social trust,and the greater economic policy uncertainty,the impact of cross-ownership on corporate innovation is more.Significantly.After a series of stable tests such as the return of Heckman selection modle,Propensity Score Matching Difference in Differences,etc.,the conclusion was still established.(2)In terms of mechanism,cross-ownership can significantly reduce corporate agency costs.At the same time,cross-ownership are significantly negatively related to financing constraints.This shows that reducing the cost of proxy and relieving financing constraints are important mechanisms for cross-ownership to affect corporate innovation.(3)In terms of economic consequences,cross-ownership effectively improve the correlation between the innovation efficiency and innovation value of the enterprise.The contribution of this paper may have marginal contributions mainly in the following three aspects: First,from the perspective of cross-ownership,this paper discusses its effect on enterprise innovation,which provides a new empirical basis for expanding and deepening the research on influencing factors of enterprise innovation.Second,from the perspective of enterprise innovation,by putting the impact,heterogeneity and specific mechanism of cross-ownerships on enterprise innovation into the same framework,it is helpful to enrich and expand the research on the positive impact of cross-ownerships.Third,the research conclusions of this paper have important policy implications,which will help enterprises and relevant departments to clarify the resource advantages of cross-ownership,actively guide cross-ownerships to play a synergistic role in governance,and promote enterprise innovation.