Does the Depreciation of RMB Exchange Rate Inhibit the Innovation of Export Enterprises?

Abstract

Based on the sample of Chinese A-share listed companies from 2011-2016, this paper examines the impact of RMB exchange rate depreciation on enterprise innovation from the perspective of investment motivation. The study found that the devaluation of the RMB exchange rate significantly inhibited the innovation of export enterprises. In the sample of export enterprises, this paper uses OLS regression to find that RMB devaluation significantly inhibits the innovation of export enterprises. Further study on the exporting enterprises group found that this conclusion is only significant in the sub-sample of private enterprises, small scale enterprises and enterprises with high industry competition degree. Because these enterprises have a stronger motivation to pursue profits, in case that the depreciation of RMB exchange rate is conducive to exports, they are more likely to increase their investment in production in order to expand their exports, ignoring innovation investment. This shows that the export enterprises are in the face of the short-term profit-making opportunities arising from the devaluation of the RMB, and the weakening of motivation for investment innovation is the mechanism of devaluation of the RMB to curb enterprise innovation. Finally, in the robustness test, this paper considers the lagging effect of RMB depreciation, and replaces the innovation index of enterprises, and the results are still consistent with the main regression results.

Cfo Serving as Board Secretary and Enterprise Sustainable Development Performance

“…Financing constraints limit the efficiency of investment in state-owned enterprises (Li & Xie, 2018), weaken the positive impact of currency appreciation and R&D expenditure (Wang& Lu, 2018), reduce foreign direct investment, and significantly inhibit enterprises' import behavior, innovation investment, and R&D intensity (Yang et al, 2021), thereby potentially affecting the investment in sustainable development projects and, consequently, their sustainable development performance.…”