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Family firms, sustainable innovation and financing cost: Evidence from Chinese hi-tech small and medium-sized enterprises

Dong Xiang, Jiakui Chen, David Tripe and Ning Zhang ()

Technological Forecasting and Social Change, 2019, vol. 144, issue C, 499-511

Abstract: Using a large sample of hi-tech Chinese small and medium-size enterprises (SMEs), we examine whether family-owned businesses (FBs) can display more efficient use of innovation resources than non-FBs. We find that though family firms invest less in innovation input i.e. R&D expenditure, they outperform the non-FBs in terms of innovation output i.e. sales of new products or technology. We also find that the higher conversion rate of innovation input into output is closely related to financial constraints on innovation. The results suggest that the interaction between family ownership and financing cost has a significant negative effect on innovation, measured by R&D intensity and innovative sales. In addition, knowledge derived from competitors, universities and industry associations can effectively enhance innovative sales.

Keywords: Small and medium-sized enterprises (SMEs); Innovation input; Innovation output; Family firms; Financing cost; China (search for similar items in EconPapers)
JEL-codes: C24 O32 G32 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.techfore.2018.02.021

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