IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v15y2024i3d10.1007_s13132-023-01501-8.html
   My bibliography  Save this article

Fostering Enterprise Innovation: The Impact of China’s Pilot Free Trade Zones

Author

Listed:
  • Ting Lei

    (Shandong University of Finance and Economics)

  • Ping Xie

    (Yantai Institute of Technology)

Abstract

In the ever-changing global landscape, economic development opportunities arise from novel circumstances. Economic globalization and the rapid internationalization of enterprises are promoting international economic growth. Concurrently, domestic economies transition from high-speed growth to superior-quality growth. Amidst this complexity, innovation emerges as a catalyst for enhancing enterprise quality and global competitiveness. China’s pilot free trade zones (FTZs), established in 2013, serve as experimental platforms to drive policy experimentation, attract foreign investment, and streamline cross-border trade. This study examines the impact of these zones on enterprise innovation using patent application data from China’s A-share listed companies between 2011 and 2020. While existing research often focuses on macroeconomic FTZ impacts, this study explores microeconomic implications on individual enterprises. Using Shanghai and Shenzhen A-share listed companies, a multi-period difference-in-differences method is employed to explore the influence of FTZ establishment on innovation output. The findings reveal that FTZs enhance enterprise innovation output, with heterogeneity across technology-intensive and state-owned enterprises. Financial constraints are identified as a mechanism linking FTZs to innovation. Theoretical implications emphasize the positive correlation between FTZs and innovation output, highlighting policy-driven incentives. Heterogeneity insights offer tailored interventions for diverse enterprise profiles. The study enriches innovation understanding, contributing to policy formulation. Managerial implications underscore FTZs’ dynamic catalyst role in enterprise innovation. Recommendations are offered for policymakers and practitioners to leverage FTZs for fostering innovation and economic growth. Ideas for future research suggest longitudinal analyses, global comparisons, and in-depth policy mechanism exploration. As the world economy evolves, FTZs emerge as key players in shaping innovation trajectories.

Suggested Citation

  • Ting Lei & Ping Xie, 2024. "Fostering Enterprise Innovation: The Impact of China’s Pilot Free Trade Zones," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 10412-10441, September.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:3:d:10.1007_s13132-023-01501-8
    DOI: 10.1007/s13132-023-01501-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-023-01501-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-023-01501-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stephan Price & Tim Wilkinson & Tim Coles, 2022. "Crisis? How small tourism businesses talk about COVID-19 and business change in the UK," Current Issues in Tourism, Taylor & Francis Journals, vol. 25(7), pages 1088-1105, April.
    2. Haoqiang Li & Jihong Chen & Zheng Wan & Huaxin Zhang & Maoxin Wang & Yun Bai, 2020. "Spatial evaluation of knowledge spillover benefits in China’s free trade zone provinces and cities," Growth and Change, Wiley Blackwell, vol. 51(3), pages 1158-1181, September.
    3. Xiuli Sun & Cui Zhou & Zhuojiong Gan, 2023. "Green Finance Policy and ESG Performance: Evidence from Chinese Manufacturing Firms," Sustainability, MDPI, vol. 15(8), pages 1-27, April.
    4. Zheng, Guo & Barbieri, Elisa & Di Tommaso, Marco R. & Zhang, Lei, 2016. "Development zones and local economic growth: zooming in on the Chinese case," China Economic Review, Elsevier, vol. 38(C), pages 238-249.
    5. Mr. Lisandro Abrego & Mr. Mario de Zamaroczy & Tunc Gursoy & Garth P. Nicholls & Hector Perez-Saiz & Jose-Nicolas Rosas, 2020. "The African Continental Free Trade Area: Potential Economic Impact and Challenges," IMF Staff Discussion Notes 2020/004, International Monetary Fund.
    6. Lisandro Abrego & Mario de Zamaroczy & Tunc Gursoy & Garth P. Nicholls & Hector Perez-Saiz & Jose-Nicolas Rosas, 2020. "The African Continental Free Trade Area: Potential Economic Impact and Challenges," IMF Staff Discussion Notes 20/04, International Monetary Fund.
    7. Feng, Wei & Sun, Shujun & Yuan, Hang, 2023. "Research on the efficiency of factor allocation in the pilot free trade zones," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 727-745.
    8. Ge, Tao & Cai, Xuesen & Song, Xiaowei, 2022. "How does renewable energy technology innovation affect the upgrading of industrial structure? The moderating effect of green finance," Renewable Energy, Elsevier, vol. 197(C), pages 1106-1114.
    9. Handley,Antoinette, 2019. "Business and Social Crisis in Africa," Cambridge Books, Cambridge University Press, number 9781108426312, January.
    10. Lihui Wang & Zhihong Liu & Huailong Shi, 2022. "The Impact of the Pilot Free Trade Zone on Regional Financial Development," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(5), pages 154-184, September.
    11. Suzuki, Keishun, 2020. "Patent Protection, Optimal Licensing, And Innovation With Endogenous Entry," Macroeconomic Dynamics, Cambridge University Press, vol. 24(8), pages 2033-2059, December.
    12. Benjamin H. Liebman & Kara M. Reynolds, 2019. "Competitive pressure, innovation and trade protection: Evidence from US patent data," The World Economy, Wiley Blackwell, vol. 42(6), pages 1695-1712, June.
    13. Ma, Guangcheng & Qin, Jiahong & Zhang, Yumeng, 2023. "Does the carbon emissions trading system reduce carbon emissions by promoting two-way FDI in developing countries? Evidence from Chinese listed companies and cities," Energy Economics, Elsevier, vol. 120(C).
    14. Bai, Min & Li, Shihe & Lien, Donald & Yu, Chia-Feng (Jeffrey), 2022. "The winner's curse in high-tech enterprise certification: Evidence from stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 82(C).
    15. Yang, Lan & Wang, Xue-Chao & Dai, Min & Chen, Bin & Qiao, Yuanbo & Deng, Huijing & Zhang, Dingfan & Zhang, Yizhe & Villas Bôas de Almeida, Cecília Maria & Chiu, Anthony S.F. & Klemeš, Jiří Jaromír & W, 2021. "Shifting from fossil-based economy to bio-based economy: Status quo, challenges, and prospects," Energy, Elsevier, vol. 228(C).
    16. Rowland Atkinson & Hazel Easthope, 2009. "The Consequences of the Creative Class: The Pursuit of Creativity Strategies in Australia's Cities," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 33(1), pages 64-79, March.
    17. Zhao-Zhen Zhu & Yue Chen & Jiang Zhao & Zhu-Ying Yu, 2023. "Intelligent Manufacturing and Value Creation in Enterprises: Lessons from a Quasi-Natural Experiment in a Chinese Demonstration Project," Sustainability, MDPI, vol. 15(15), pages 1-17, July.
    18. Chan, Chui Shiam & Pattnaik, Chinmay, 2021. "Coevolution of home country support and internationalization of emerging market firms," International Business Review, Elsevier, vol. 30(4).
    19. Yadong Luo & Rosalie L Tung, 2018. "A general theory of springboard MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 129-152, February.
    20. Handley,Antoinette, 2019. "Business and Social Crisis in Africa," Cambridge Books, Cambridge University Press, number 9781108445030, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sall, Leysa Maty & Ramos, Maria Priscila, 2020. "AfCFTA: Does it fast-track structural transformation in Senegal?," Conference papers 333184, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Perez Onono & Francis Omondi & Alice Mwangangi, 2024. "Impacts of Regional Integration and Market Liberalization on Bilateral Trade Balances of Selected East African Countries: Potential Implications of the African Continental Free Trade Area," Economies, MDPI, vol. 12(6), pages 1-21, June.
    3. Henrique Correa da Cunha & Vikkram Singh & Shengkun Xie, 2022. "The Determinants of Outward Foreign Direct Investment from Latin America and the Caribbean: An Integrated Entropy-Based TOPSIS Multiple Regression Analysis Framework," JRFM, MDPI, vol. 15(3), pages 1-22, March.
    4. Larissa Batrancea & Malar Mozhi Rathnaswamy & Ioan Batrancea, 2021. "A Panel Data Analysis of Economic Growth Determinants in 34 African Countries," JRFM, MDPI, vol. 14(6), pages 1-15, June.
    5. Christian P. Schneider & Edeltraud Guenther & Dominik Möst, 2024. "International technology transfer to Africa in light of the SDGs: What do we know about the barriers?," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(4), pages 2129-2151, May.
    6. Wenqing Zhang & Jingrong Dong, 2023. "The Polarization Effect and Mechanism of China’s Green Finance Policy on Green Technology Innovation," Sustainability, MDPI, vol. 15(13), pages 1-26, June.
    7. Xie, En & Li, Fanshu & Wu, Zhan & Kumar, Vikas, 2024. "State ownership and Chinese private firms’ OFDI in developed economies," Journal of World Business, Elsevier, vol. 59(3).
    8. Li, Zhaohua & Pang, Suqin & Zhu, Zhiyun, 2024. "The impact of pilot free trade zones on entrepreneurship: Evidence from a quasi-natural experiment in China," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).
    9. Li, Wei & Liu, Zhi & Xia, Senmao & Yan, Ji & Xiong, Yu & Sakka, Georgia & Yu Li, Rebecca, 2022. "How can emerging-market SMEs domestically benefit from their performance in developed countries? Empirical evidence from China," Journal of Business Research, Elsevier, vol. 142(C), pages 200-210.
    10. Utesch-Xiong, Fredrik & Leymann, Gunnar & Lundan, Sarianna M., 2024. "More policy is not always effective policy: How policy coherence affects firm internationalization," International Business Review, Elsevier, vol. 33(3).
    11. Sall, Leysa Maty, 2022. "Impact of Tariff and Non-tariff measures removals on structural transformation and poverty in Senegal: the case of AfCFTA," Conference papers 333442, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Ge, Qian-Qian & Liu, Xi-Hua & Zhang, Yu-Chen & Liu, Shi-Qi, 2023. "Has China’s Free Trade Zone policy promoted the upgrading of service industry structure?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1171-1186.
    13. Guan, Chenghua & Huang, Jinyuan & Jiang, Ruyue & Xu, Wanting, 2023. "The impact of pilot free trade zone on service industry structure upgrading," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 472-491.
    14. Kemal Türkcan & Socrates Majune Kraido & Eliud Moyi, 2022. "Export margins and survival: A firm‐level analysis using Kenyan data," South African Journal of Economics, Economic Society of South Africa, vol. 90(2), pages 149-174, June.
    15. Arie Y Lewin & Silvia Massini & Carine Peeters, 2020. "Absorptive capacity, socially enabling mechanisms, and the role of learning from trial and error experiments: A tribute to Dan Levinthal’s contribution to international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1568-1579, December.
    16. Lan Guo & Ling Yang, 2023. "The Corporate Economic Influence and Corporate Social Responsibility: Evidence from China," Sustainability, MDPI, vol. 15(13), pages 1-22, July.
    17. Lee, Chien-Chiang & Wang, Fuhao & Lou, Runchi & Wang, Keying, 2023. "How does green finance drive the decarbonization of the economy? Empirical evidence from China," Renewable Energy, Elsevier, vol. 204(C), pages 671-684.
    18. Klaus E. Meyer & Chengguang Li & Andreas P. J. Schotter, 0. "Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-39.
    19. Da Gao & Xiaotian Zhou & Jing Wan, 2024. "Unlocking sustainability potential: The impact of green finance reform on corporate ESG performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4211-4226, September.
    20. Federica Nieri & Luciano Ciravegna & Ruth V. Aguilera & Elisa Giuliani, 2019. "Larger, more internationalized, better behaved? A configurational study of em erging market multinational enterprises' involvement in corporate wrongdoing," Discussion Papers 2019/255, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jknowl:v:15:y:2024:i:3:d:10.1007_s13132-023-01501-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.