Credit Constraints and the Inverted‐U Relationship Between Competition and Innovation

Bonfatti, Roberto; Pisano, Luigi

doi:10.1111/ecca.12312

Cited by 8 publications

(10 citation statements)

References 45 publications

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“…In the innovation theory of Schumpeter, there is a close relationship between market competition and corporate innovation, and innovation outcomes can be an important way for enterprises to alleviate the pressure of market share (Bonfatti and Pisano, 2020). In the product market, the degree of competition will result in the different efforts of enterprises in green innovation.…”

Section: Product Market Competition and Green Innovationmentioning

confidence: 99%

“…On the other hand, excessive competition may hinder corporate innovation, and then promote the similarity of products with reducing the profitability of enterprises. Therefore, there may be a nonlinear relationship between product market competition and green innovation (Aghion et al, 2005;Bonfatti and Pisano, 2020).…”

Section: Product Market Competition and Green Innovationmentioning

confidence: 99%

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How to Enhance the Green Innovation of Sports Goods? Micro- and Macro-Level Evidence From China’s Manufacturing Enterprises

Cheng-yin

Ying

2022

Front. Environ. Sci.

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This study aims to explore the driving factors of green innovation, and uses the micro- and macro-data from China’s sports goods manufacturing industries. In particularly, sports goods manufacturing enterprises are identified by the textual analysis of information disclosure, and the competitive environment faced by each enterprise is built through their unique closest rivals. Empirically, this study finds that competition and policy can promote green innovation in sports goods manufacturing industries, and industrial policy can moderate the role of product market competition in promoting green innovation. Considering the characteristics of the Chinese market, more industrial policies may intensify the competition among manufacturing enterprises, forcing such enterprises to obtain competitive advantages through innovation outcomes. It is worth noting that the association between product market competition and green innovation changes as financial constraints increase, and this may be caused by the impact of industrial policy on the interactions among enterprises. After implementing the strict environmental policy, product market competition and industrial policy can both promote green innovation. In high-polluting industries, sports goods manufacturing enterprises get more social attention and suffer from higher penalties for environmental violations, so that such enterprises will get more motivations from industrial policies to support green innovation. In addition, we also find that there is a significant inverted-U shape relationship between industrial policy and green innovation in sports goods manufacturing industries. As financial constraints increase, the non-linear relationship between product market competition and green innovation converts from a U shape relationship to an inverted-U shape relationship. Our findings can provide a better understanding of the investment of sports goods manufacturing enterprises in green innovation.

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Section: Product Market Competition and Green Innovationmentioning

confidence: 99%

Section: Product Market Competition and Green Innovationmentioning

confidence: 99%

How to Enhance the Green Innovation of Sports Goods? Micro- and Macro-Level Evidence From China’s Manufacturing Enterprises

Cheng-yin

Ying

2022

Front. Environ. Sci.

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“…Finally, it will reduce the credit resources to non-urban investment enterprises. Notably, existing literature argues that a reduction in credit resources will reduce corporate R&D investment [17][18][19][20]. Specifically, in China, where the financial system is underdeveloped, bank loans are the PLOS ONE most important external financing method for corporates to obtain funds for innovative activities.…”

Section: Theoretical Hypothesismentioning

confidence: 99%

“…In this study, we explored three channels by which LGD affects corporate R&D investment. That is, (1) the LGD will consume the regional fiscal resources available to enterprises, which would reduce corporate R&D investment [11,12]; (2) the LGD will strengthen the local government collection efforts on the corporation, which would reduce corporate R&D investment [13][14][15][16]; and (3) the LGD will consume regional credit resources available to enterprises, which would reduce corporate R&D investment [17][18][19][20].…”

Section: Introductionmentioning

confidence: 99%

Crowding in or crowding out? How local government debt influences corporate innovation for China

Feng

et al. 2021

PLoS ONE

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The pressure upon local governments to redeem their debt could affect government fiscal ability. It could consequently affect their fiscal policies on corporations, which might distort corporate innovation. Based on the data of Chinese Shanghai and Shenzhen A-share listed companies and the local government implicit short-term debt financed by local government financing vehicles (LGFVs) in 31 provinces, this paper shows that local government debt (LGD) negatively affects corporate R&D investment in China, thereby suggesting a strong crowding-out effect. The crowding-out effect is more pronounced when the firm is a non-state-owned enterprise (NSOE), the firm’s size is small, the firm’s age is young, or the firm is in the lower market competition. This paper provide evidence by interacting the terms that local government actions, such as consumption of fiscal resources, strengthening tax collection efforts, or consumption of credit resources, might partially account for the crowding-out effect. This study illustrates the innovation costs of local government debt.

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“…Two different research directions can be identified from these discrepancies in literature; the first is opposing views of the Arrow-Schumpeter debate and the second is the integration of both to examine the dual impacts of rivalry (Negassi et al, 2019;Bonfatti and Pisano, 2020). A strand of literature (Tang, 2006;Vives, 2008;Darai et al, 2010;Castellacci, 2011) provides empirical evidence on the relevance of the Arrow-Schumpeter debate.…”

Section: Introductionmentioning

confidence: 99%

Competitive Pressure and Firm-Level Innovation: The Perspective of a Developing Economy

Younas

Rehman

2020

JAEBS

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The connection between firm-level innovation and competition has received scholarly attention for a long time before now. This paper attempts to shed light on this complex relationship from a novel perspective where a detailed firm-level dataset of private manufacturing Pakistani firms spanning from 2002 to 2015 is used. We test whether the non-linearity estimate of Aghion et al. (2005) is sustained by our firm-level data. A multivariate probit estimation technique indicates that higher competition leads to a more probability of innovation, but at a declining rate as competitor numbers increase. Moderate confirmation of an inverted-U relationship between competition and innovation is found, especially in process and organizational innovation. The findings have practical implications for policymakers in the area of market structure and firm-level innovation.

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Credit Constraints and the Inverted‐U Relationship Between Competition and Innovation

Cited by 8 publications

References 45 publications

How to Enhance the Green Innovation of Sports Goods? Micro- and Macro-Level Evidence From China’s Manufacturing Enterprises

How to Enhance the Green Innovation of Sports Goods? Micro- and Macro-Level Evidence From China’s Manufacturing Enterprises

Crowding in or crowding out? How local government debt influences corporate innovation for China

Competitive Pressure and Firm-Level Innovation: The Perspective of a Developing Economy

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