The Relationship between Foreign Competition and Innovation Activities Based on Quantile Regression

Abstract

This article uses quantile regression to shed light on the complex relationship between foreign competition and innovation activities. Quantile regression is more powerful than classical linear regression since quantile regression can produce estimates for all conditional quantiles of the distribution of the innovation activities variable, whereas classical linear regression only estimates the conditional mean effects. The empirical evidence shows that the effect of foreign competition on make innovation activities is different across the conditional quantiles of the distribution of innovation activities, something classical linear regression would leave unidentified. This finding suggests that estimating the quantile effect of innovation activities variable can well be more insightful than effect. Additionally, this article finds a U-shaped relationship between foreign competition and make innovation activities.

The Nexus between Foreign Competition and Buying Innovation: Evidence from China’s High-Technology Industry

“…Liu et al in [39], examined foreign competition and makingbuying innovative activities that have a link via panel data from China's high-tech sectors. Su-Yi et al in [57], studied the link between international competition and the ability to create new products, using data from the United States, and reported a U-shape connection of foreign competition and innovation. Following [57], we focused on the association between overseas competition and buying innovation via panel data of China's high-tech industries from 2010 to 2017.…”

“…Su-Yi et al in [57], studied the link between international competition and the ability to create new products, using data from the United States, and reported a U-shape connection of foreign competition and innovation. Following [57], we focused on the association between overseas competition and buying innovation via panel data of China's high-tech industries from 2010 to 2017. Comparatively, there is not much information regarding how international competition works and influences innovation activities in developing economies.…”