R&D Returns, Spillovers and Firm Incentives: Evidence from China

Chor-Ching Goh (), Lixin Xu and Wei Li ()
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Wei Li: Cheung Kong Graduate School of Business, Beijing 100738, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2016, vol. 11, issue 4, 581-607

Abstract: Using a new data set of 12,000 firms in China, this paper estimates the returns to R&D investment and its spillover effects, and investigates how the returns to R&D depend on firm incentives. For the firms in the sample, the results show that on average firm output increases around 0.4 yuan for each additional 1 yuan spent on R&D in the previous year, and there is high R&D return regardless of whether the endogeneity of R&D intensity is dealt with or not. Interestingly, the marginal return to R&D is significantly higher in firms whose CEOs were not appointed by the government, and lower when CEO pay is directly related to annual performance. The return to R&D is higher in relatively poor regions and for firms with worse access to finance. There are also non-trivial R&D spillover effects.

Keywords: R&D; returns; incentives; spillover (search for similar items in EconPapers)
JEL-codes: D22 D24 O31 O40 (search for similar items in EconPapers)
Date: 2016
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