Determinants of Financial Performance in China’s Intelligent Manufacturing Industry: Innovation and Liquidity

Guanghong Zhang and Yune Lee
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Guanghong Zhang: Department of International Trade, Graduate School of Humanities and Social Sciences, Incheon National University, Incheon 22012, Korea
Yune Lee: Department of International Trade, Incheon National University, Incheon 22012, Korea

IJFS, 2021, vol. 9, issue 1, 1-19

Abstract: This study focuses on the mediation channels through which the financial performance of intelligent manufacturing industries closely related to the Fourth Industrial Revolution has been affected. Along with compiling a massive volume of datasets publicized by the Chinese government and other authoritative institutions, a survey of the 317 listed enterprises of the intelligent manufacturing industries in China has been established for statistical analysis. Using Structural Equation Modeling (SEM), this research tests six hypotheses and confirms the inter-factor impact relationship between exogenous and endogenous factors. We find that innovation efforts mainly led by increasing investment in Research & Development (R&D), along with high liquidity, surely lead to good financial performance, whereas innovation efforts alone do not. Government support policy has been found to be closely related not only to higher liquidity, but to good financial performance through the common channel of R&D investment. Regional innovation capability has been revealed to be related to R&D investments, and, furthermore, to liquidity, which shows that the regional innovation system in China has been functioning relatively well to induce enterprises to increase investments and secure higher liquidity, and finally contribute to achieving better business performance. However, regional economic development shows no relationship with R&D investments, and consequently neither with liquidity nor with performance.

Keywords: intelligent manufacturing industry; financial performance; corporate finance; corporate innovation; financial liquidity; Fourth Industrial Revolution; Structural Equation Modeling (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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