HE Yurun,etc:Product Market Competition, Executive Incentives and Corporate Innovation ——Empirical Evidence From Listed Chinese Companies

Abstract：The mechanism of product market competition on innovation of enterprises has always been a controversial topic in industrial organization.This paper is different from previous researches that we examine their relationship in different nature of property and select data of A-share non-financial listed companies in China from 2007 to 2012.We find that product market competition has significant and positive effect on corporate innovation from “inter-industry competition” and “competition within industries” dimensions, but the effect is weaker in state-owned enterprises.In addition, product market competition can improve more innovation in enterprises which have higher levels of managerial compensation and stock-based incentives.The conclusion shows that product market competition can play an important and active role on the innovation of Chinese listed companies, but the property of SOEs is not conducive to the function of competition.Meanwhile, if enterprises improve executive incentives, it is more advantageous for enterprises to promote innovation in the fierce market environment.Our conclusion is of great importance for understanding the decision mechanism of Chinese corporate innovation in economic transition period and promoting the construction of an innovative country.

Key words： Product Market Competition    Corporate Innovation    Nature of Property Right    Executive Incentives

source:Finance & Trade Economics ,No.2,2015