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Corporate key labs: Breakthrough or white elephant?

Author

Listed:
  • Zhao, Qifeng
  • Luo, Qianfeng
  • Zhao, Xiaofeng
  • Yu, Yihua

Abstract

Based on manually collected data from Chinese listed firms' key laboratories at the state and provincial levels, this study shows that key laboratories improve firms' innovation output. Corporations with key laboratories at the state or provincial level produce more patents and citations than their counterparts. A series of endogenous treatment effects, including the Heckman two-step sample selection model, instrumental variable estimation, policy shock analysis, and propensity score matching, indicate that this study's main conclusion is robust and consistent. We also observe that key laboratories' beneficial impact on innovation output becomes more prominent for firms belonging to high-tech industries, those led by an inventor or scientist CEO, and those located in cities that enforce the protection of intellectual property. Further, key laboratories foster innovation mainly by developing scientific research capacity, increasing human capital, and improving R&D subsidies. Our findings demonstrate that key laboratories can benefit firms, their stakeholders, and the public in an emerging market such as China.

Suggested Citation

  • Zhao, Qifeng & Luo, Qianfeng & Zhao, Xiaofeng & Yu, Yihua, 2023. "Corporate key labs: Breakthrough or white elephant?," China Economic Review, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:chieco:v:79:y:2023:i:c:s1043951x23000391
    DOI: 10.1016/j.chieco.2023.101954
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    Cited by:

    1. Zhao, Qifeng & Luo, Qianfeng & Tao, Yunqing, 2023. "The power of paper: Scientific disclosure and firm innovation," Finance Research Letters, Elsevier, vol. 56(C).

    More about this item

    Keywords

    Corporate key laboratory; Innovation; Corporate science; Human capital; R&D subsidy;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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