Public-private partnership effect on the company technology innovation-empirical and theory: evidence from China

As China’s economy enters the ‘new normal’ operational stage, the widespread adoption of the Public-Private Partnership (PPP) model has engendered substantial transformations in infrastructure investment and financing practices, progressively moving towards standardization. This study employs indicators such as Research and Development (R&D) investments and the number of patents held by publicly listed companies to assess their innovation performance. Employing a Differences-in-Differences (DID) empirical methodology, and utilizing the Propensity Score Matching (PSM) trend-matching technique to establish experimental and control groups, we empirically investigate whether participation in PPP projects exerts an influence on the innovation investments of listed companies and whether it results in a detrimental crowding-out effect. The empirical findings of our analysis demonstrate that engagement in PPP projects leads to a reduction in the innovation investments made by listed companies, thereby exerting a significant impact. Additionally, the magnitude of the crowding-out effect on innovation is positively correlated with the number of PPP projects, though the effect is not particularly pronounced or statistically significant. This study further conducts an in-depth comparative analysis of the innovation levels observed within state-owned enterprises and private firms. It subsequently proposes targeted solutions aimed at enhancing the innovation capacities of both state-owned and private enterprises.