The Impact of Group Control on the Effectiveness of Enterprise Innovation: An Empirical Study

Bo Zeng, Weimin Zhang (), Defang Ma, Chenyang Zhang and Xiao Liu
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Bo Zeng: School of Economics and Management, Beijing Forestry University, Beijing 100083, China
Weimin Zhang: School of Economics and Management, Beijing Forestry University, Beijing 100083, China
Defang Ma: School of Management, Capital Normal University, Beijing 100089, China
Chenyang Zhang: School of Management, Henan University of Technology, Zhengzhou 450001, China
Xiao Liu: School of Economics and Management, Beijing Forestry University, Beijing 100083, China

Sustainability, 2023, vol. 15, issue 13, 1-15

Abstract: Innovation has been elevated beyond the traditional forces of production, by the emergence of a new wave of industrial upgrading and the technological revolution, to become a significant force in the advancement of human society. Can an enterprise group, a significant type of industrial organization, improve the effectiveness of enterprise innovation? Here, a quantitative analysis approach was used to systematically analyze the impact of group control on enterprise innovation effectiveness and its transmission path based on the logical framework of the “policy environment-influence effect-influence path”. The study found that group control significantly improves the effectiveness of enterprise innovation compared to independently listed enterprises. The impact path showed that group control can reduce financing constraints through internal capital markets. It increases the investment in innovation and thus enhances the effectiveness of enterprise innovation. Meanwhile, internal information exchange is accelerated through the internal knowledge market, improving enterprise innovation’s effectiveness. The results of this study were still valid after robustness tests, such as propensity score matching and accounting for lag effects. According to the paper’s findings, to enhance financial support for innovation, financial market reform should be intensified. The growth of manufacturing enterprise groups should also be encouraged. Additionally, the ability of businesses to innovate while improving the internal benefits of enterprise groups and their innovation paths should be strengthened.

Keywords: group control; innovation effectiveness; sustainable development; internal capital market; internal knowledge market (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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