Competition Order and Innovation Behaviors of Enterprise in China

Abstract

This study addresses the apparent puzzle that China made great progress in mobile phone manufacturing despite weak intellectual property protection. Using the China 2012 Enterprise Surveys Data set of World Bank enterprises survey, we investigated whether competition order mattered for innovation behaviors of enterprise and mainly drew three major conclusions. First, when there are unregistered or informal competitors in the market, enterprises tend to choose innovation to improve the current situation of their own operations, and they may increase the R&D investment. Second, when the unregistered or informal competitors in the market become obstacles to the enterprise, with the rise of disorderly barriers to competition, enterprises will reduce their decision-making of innovation behavior or the intensity of R&D investment. Third, the impartiality degree of court may have a moderating effect on the relationship between competition order and corporate innovation behavior.