How Can Local Policy Uncertainty Encourage Firm Innovation: A Competitive Advantage Channel

43 Pages Posted: 26 Jan 2018 Last revised: 15 Feb 2020

See all articles by Xiaoran Ni

Xiaoran Ni

Xiamen University - School of Economics; Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Date Written: February 14, 2020

Abstract

Exploring the turnovers of city heads in China, I find that local policy uncertainty can encourage firm innovation. This positive relation is concentrated in state-owned enterprises (SOEs), which possess competitive advantages (especially resource-based) due to innate government connections. Additionally, for SOEs, invention patents filed despite local policy uncertainty contribute to higher sales growth and an increase in product market shares. My findings indicate that innate government connections enable firms to mitigate local policy uncertainty and explore first-mover advantages through innovation activities.

Keywords: Local Policy Uncertainty; Firm Innovation; Competitive Advantage; Government Connection; State-owned Enterprises

JEL Classification: G34; G38; G34

Suggested Citation

Ni, Xiaoran, How Can Local Policy Uncertainty Encourage Firm Innovation: A Competitive Advantage Channel (February 14, 2020). Asian Finance Association (AsianFA) 2018 Conference, Available at SSRN: https://ssrn.com/abstract=3109709 or http://dx.doi.org/10.2139/ssrn.3109709

Xiaoran Ni (Contact Author)

Xiamen University - School of Economics ( email )

D204
Economic Building
Xiamen, Fujian 361005
China

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

Xiamen
China

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
263
Abstract Views
1,523
Rank
211,621
PlumX Metrics