Academic journal article Canadian Social Science

Ownership Structure and Firm Technical Innovation: A Theoretical and Empirical Analysis on Chinese Enterprises1/STRUCTURE POSSESSIVE ET INNOVATION TECHNIQUE DES ENTREPRISES: UNE ANALYSE THEORIQUE ET EMPIRIQUE DANS LES ENTREPRISES CHINOISES

Academic journal article Canadian Social Science

Ownership Structure and Firm Technical Innovation: A Theoretical and Empirical Analysis on Chinese Enterprises1/STRUCTURE POSSESSIVE ET INNOVATION TECHNIQUE DES ENTREPRISES: UNE ANALYSE THEORIQUE ET EMPIRIQUE DANS LES ENTREPRISES CHINOISES

Article excerpt

Abstract:

Taking more than 600 enterprises as example, this paper analyzes the influence of managers' features on the relationship between ownership structure and technical innovation of the firm. The authors find that the managers' care to owners benefit (Emc) and the managers' talent(Ta) have positive influence on firm technical innovation (Inte), and the ownership share of different kinds of owners have different effects on Emc and Ta. Therefore, ownership structure can not only directly influence the technical innovation of the enterprises, but also influence it indirectly.

Keywords: ownership structure, firm technical innovation, managers' care to owners benefit, the managers' talent

Résumé: Prenant en exemple plus de 600 entreprises, ce document present analyse G influence des caractéristiques des managers sur les relations entre la structure possessive et l'innovation technique des entreprises. Les auteurs trouvent que l'attention des managers aux intérêts des possédants (Emc) et le talent des managers (Ta) effectue une influence positive sur G innovation techniquel des entreprises(Inte), et le partage possessif de possédants de toutes les sortes a de différents effects sur Emc et Ta. Cependant, la structure possessive peut influencer l'innovation technique des entreprises directement à la fois indirectement.

Mots clés: structure possessive, innovation technique des entreprises, attention des managers aux intérêts des possédants, talent des managers

1. INTRODUCTION

Technical innovation is regarded as the key for enterprises to improve their competitive ability (Rita Gunther McGrath,1996). In order to enhance technical innovation of the firms, the function of managers of the firms should be taken into account (J. A. Schumpeter, 1934) , and the influence of the ownership structure on firm technical innovation should be paid more attention to(Shaker A. Zahra,2000;B. J. Bushee, 1998).

But, the theoretical or empirical research of the relationship between the ownership structure and firm technical innovation is rare (Nicola Lacetera, 2001; Barry D. Bay singer, et al., 1991) , and the research of the effects of managers' features on the relationship is even infrequently.

In this paper we'll study the influences of ownership structure on managers' features, and how the ownership structure affects corporate technical innovation (Inte) through managers' features. We have 5 parts in this paper, part 2 is the theoretical analysis and hypothesis, part 3 is the research method, including data source and variable measure, part 4 is the research result, and part 5 is the discussion and conclusion.

THEORETICAL ANALYSIS AND HYPOTHESIS

To Chinese enterprise in period of economy system reforming , the managers' features can influence the firm technical innovation(Inte), and the ownership structure have effects on managers' features. Research on the separation between ownership and control (A. Berle & G. Means, 1933; Williamson, O. E., 1975) indicates that the reason why the owners hire managers to take part in the technical innovation is to make use of the managers' talent, and opportunism of the hired managers may harm the owners' benefit. Therefore, the managers' care to the owners benefit (Emc) and the managers' talent may have influence on the corporate technical innovation.

Harold Demsets(2001) argues that the function of the adjustment of property right is that of guiding incentives to a greater internalization of externalities . So the adjustment of ownership structure has two kinds of function (figure 1): to influence Emc through its effect on the owners' motive to monitor the hired managers, and to influence Ta through selecting managers by the owners. The cost (time, money, and energy) for the owners to perform the first kind of function is distributed averagely through the whole process of the owners supervision to the managers, and the cost of the second kind is usually pooled in period of selecting the managers. …

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