R&D Investment, Skill-Based Wage Gap, and Firm Innovation Performance: Evidence from Chinese Listed Companies

He Tong, Saizal Pinjaman and Debbra Toria Nipo ()
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He Tong: Faculty of Business, Economics, and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu 88400, Malaysia
Saizal Pinjaman: Faculty of Business, Economics, and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu 88400, Malaysia
Debbra Toria Nipo: Faculty of Business, Economics, and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu 88400, Malaysia

JRFM, 2025, vol. 18, issue 11, 1-24

Abstract: Against China’s innovation-driven strategy, this study explores the impact of R&D investment on firm innovation performance and the mediating role of the wage gap between high- and low-skilled labor (HLWG) using data from Chinese A-share non-financial listed firms spanning 2010–2022. Employing static panel regression, Bootstrap test, and instrumental variables (R&D investment deduction, college enrollment expansion), the study finds three key results. First, R&D investment positively affects both firm innovation performance and HLWG. Second, HLWG exerts a positive impact on firm innovation performance. Third, HLWG plays a partial mediating role in the relationship between R&D investment and firm innovation performance. Robustness tests and instrumental variable regression confirm the stability of these conclusions. This finding enriches the theoretical understanding of the R&D-innovation transmission mechanism, offers insights into enterprises to coordinate R&D investment and wage structure optimization, and provides policy references for refining innovation incentives and labor market policies.

Keywords: R&D investment; HLWG; firm innovation performance; mediating effect; instrumental variables (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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