How does China’s industrial policy affect firms’ R&amp;D investment? Evidence from ‘Made in China 2025’

Wen, Huwei; Zhao, Zhao

doi:10.1080/00036846.2020.1717429

Cited by 52 publications

(25 citation statements)

References 34 publications

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“…Now we are focused on the credit allocation between SOEs and private enterprise, and the different effects they have on the environment. Inspired by the growth miracle of East Asian countries, a large body of literature has supported that incentive industrial policies are important for enterprises to invest in long-term assets and innovation activities [17][18][19]. China has introduced credit policies to encourage the development of small and medium enterprises, most of which are private enterprises.…”

Section: Literature Review and Hypothesis Development 21 Credit Allocation Structure And Environmental Pollutionmentioning

confidence: 99%

Environmental Effects of Credit Allocation Structure and Environmental Expenditures: Evidence from China

Yang

Liu

et al. 2021

Sustainability

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This article studies how the allocation structure of bank credit capital between state-owned and private enterprises and government environmental expenditures affect environmental pollution in China. The present literature argues that credit allocation and government environmental expenditures may play an important role in environmental quality improvement. However, these studies rarely consider the credit allocation structure between State-owned enterprises (SOEs) and private enterprises; in addition, they overlook the interaction effects of credit allocation and government environmental expenditures. Based on these, we put forward three hypotheses. Moreover, the study applies relevant spatial data for 2011–2017 from 31 provinces in China to a spatial econometric model, and the results indicate that (1) environmental pollution among provincial regions shows a significant positive spatial autocorrelation. (2) Environmental expenditures and environmental pollution display an inverse U-shaped relationship, which supports the numerical simulation results. (3) The interaction effect of credit allocation structure and environmental expenditures on environmental pollution is significantly positive, which means that the allocation of more credit capital to private enterprises will restrain the effect of government environmental expenditures. With the increasing significance of environmental protection in China, it is necessary to strengthen the supervision of private enterprises’ environmental pollution behavior, expand government expenditures on ecological protection, and promote regional collaborative environmental governance to improve environmental quality.

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Section: Literature Review and Hypothesis Development 21 Credit Allocation Structure And Environmental Pollutionmentioning

confidence: 99%

Environmental Effects of Credit Allocation Structure and Environmental Expenditures: Evidence from China

Yang

Liu

et al. 2021

Sustainability

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“…The study is based on the set of listed manufacturing firms for June 2020 using the National Industrial Classification (NIC) codes‐2008. Similar to other studies on R&D and firm performance, we focus only on manufacturing firms (Chang & Su, 2010 ; Jin et al, 2018 ; Wen & Zhao, 2020 ). Additionally, data is obtained for June 2019, June 2018, and June 2016 quarters for these listed manufacturing firms.…”

Section: Data and Variablesmentioning

confidence: 99%

Can R&D investment reduce the impact of COVID‐19 on firm performance?—Evidence from India

Biswas

2021

Journal of Public Affairs

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This study examines whether investing in R&D reduces the impact of exogenous shocks like the COVID‐19 on stock market performance and accounting performance of manufacturing firms in India. For the sample of listed manufacturing firms, the paper finds that the firms engaged in R&D activities had lower negative cumulative abnormal return than those firms that did not invest in R&D in the pre‐pandemic period using multiple event windows. The result suggests that R&D investments can lower value erosion for the shareholders during a severe crisis period. Further, using a difference‐in‐difference fixed effects model, the study finds that manufacturing firms engaged in R&D activities in the pre‐pandemic period exhibited higher return on sales and growth of total income during the pandemic quarter vis‐à‐vis the non‐R&D firms. The favorable accounting performance indicates the possibility of firm‐level R&D being associated with the firm's ability to adjust its functioning during a crisis, thereby reducing the effect of the crisis. Finally, the study documents that government intervention to reduce the spread of the virus had a differential impact on firms based on their industry of operation. The findings have implications for investors, corporate managers, and policymakers in India.

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“…Following Wang et al (2017) and Wen and Zhao (2020), we consider the following control variables: lnSize (calculated by the logarithm of total asset), lnAge (measured by the logarithm of the survival year), Human (measured by the ratio of employees with a bachelor's degree or above), Tobin's Q (measured by the ratio of market value to total assets), Leverage (the ratio of total debt to total assets), ROA (the return on assets), Fixs (the ratio of fixed assets to total assets), SOE is a dummy variable capturing state-owned firms, Large (the percentage of shares owned by the largest shareholder), Manage (the ratio of administrative costs to sales), and lnTFP, which is the logarithm of total factor productivity. Table 1 describes each of these variables.…”

Section: B Data and Variables B Data And Variablesmentioning

confidence: 99%

“…The second is that our study focuses on the effects of credit intervention policies on restrictive industries and enriches research on industrial policy in developing countries. Industrial policies refer to incentive-based policies or restrictive-based policies for specific industries (Wen & Zhao, 2020). Although several studies focus on the effect of incentive-based industrial policy that promotes industrial expansion and development (Bose et al, 2019;Wen & Zhao, 2020), limited studies examine the economic effects of restrictive-based industrial policy that prevents industrial expansion.…”

Section: Introduction I Introductionmentioning

confidence: 99%

Does Bank Lending Intervention Hamper Firm Innovation? Evidence From the Chinese-style Capacity-Reduction Initiative

Wen

Zhong

Guo

2020

Asian Economics Letters

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Using the difference-in-differences method, this study investigates the impact of bank lending intervention on firm innovation. We find that bank lending intervention significantly hampers R&D investment of firms in overcapacity industries. Moreover, policy intervention significantly reduces bank lending but increases the firms' trade credit as well as the financing constraints of firms in overcapacity industries. Furthermore, bank lending intervention reduces the efficiency of credit allocation, an outcome which is attributed to its preference for politically connected firms rather than higher-efficiency ones.

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How does China’s industrial policy affect firms’ R&D investment? Evidence from ‘Made in China 2025’

Cited by 52 publications

References 34 publications

Environmental Effects of Credit Allocation Structure and Environmental Expenditures: Evidence from China

Environmental Effects of Credit Allocation Structure and Environmental Expenditures: Evidence from China

Can R&D investment reduce the impact of COVID‐19 on firm performance?—Evidence from India

Does Bank Lending Intervention Hamper Firm Innovation? Evidence From the Chinese-style Capacity-Reduction Initiative

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