Research on Chinese Enterprise Technological Innovation and Product Competitiveness

Abstract

This study aims to investigate the influence of product competitiveness on the technological innovation in Chinese enterprises. The investigation starts from micro-level enterprises and the samples comes from the nonfinancial sectors of Shanghai and Shenzhen listed companies during 2002-2012. Novel simultaneous equations have been established based on the Hausman simultaneous test analysis to examine whether there is endogenous between innovation and competition and also test the bidirectional relationship of product market competition and enterprise innovation. The analysis results show that excessive competition would dampen the enthusiasm of innovation and influence the improvement of enterprise technological innovation. Excessive monopoly makes the companies generate a scene of complacency and reduces technological innovation. Therefore, there exists U-shipped relationship between product competition and enterprise technological innovation. In addition, variables about enterprise characteristics and governance also show influence on the technological innovation. Based on the above conclusions, some recommendations have been proposed to improve the technological innovation of Chinese listed companies.