innovation technology ability stock enterprise industry
R & D, Technology Imports and Innovation Capacity-Evidence from High-TechIndustry of ChinaReceived 30 December 2015; accepted 19 January 2016; published 22 January 20161. IntroductionSince 1980s, the high-tech industry has become an important source of economicgrowth in every country. As a symbol of comprehensive national power and thelevel of technological advancement, the high-tech sector plays an importantrole in the economic growth of China in the new era. Technological innovation,as a key enabler of high-tech industry, can influence the wholecompetitiveness strengthening of high-tech industry and the state innovationsystem to a large extent. How to improve the innovation ability of high-techindustry also becomes an urgent problem to solve.Domestic scholars’ researches on the innovation ability of high-tech industrymainly focus on the evaluation of innovation ability, the research oninnovation efficiency and the influence of specific factors on it. Gao Dahong(2010)  has analyzed and sorted the factors that influence the innovationoutput of high-tech industry of our country and the five sub-industries bymaking use of grey correlation model and related index of innovation ability.Zhao Yulin and Cheng Ping (2013)  have built the evaluation index of theinnovation ability of high- tech industry and have dynamically evaluated theinnovation ability of every province of our country by principal componentanalysis concluding that there are serious regional differences for theinnovation ability of high-tech industry between different regions and the gapis still widening. Han Jing (2010)  has demonstrated the innovationefficiency of high-tech industry of our country by using stochastic frontieranalysis method. Wang Wei (2011)  has evaluated the innovation ability ofhigh-tech industry of every province of China as well as the developmentsituation of the high-tech industry all over China by adopting dataenvelopment analysis. Using provincial panel data, Yang Xiangyang et al.(2013)  and others have investigated innovation efficiency status of twosub-stages during innovation process of high-tech industry by applyingMalmquist index method. All above researches have analyzed the influentialfactors of innovation efficiency and innovation ability from different aspectsbut barely mentioned effective approaches to enhance innovation ability ofhigh-tech industry of our country while the research on this issue has morerealistic significance.Based on research and development of high technology and the production, high-tech industry has unceasingly transformed the high technology and knowledgeinto the industry of new products and new processing; In the process of itsprogress and development, the enhancement of innovation ability owns animportant meaning and has determined the development prospects of industries.In the context of economic globalization, if a country wants to achievetechnological progress and innovation of industries, it is also an importantway for it to completely absorb and effectively make full use of advancedtechnology and experiences both at home and abroad except relying on localresearch and development. Generally, domestic technology transfer will rely onthe way of directly purchasing of it and there are two kinds of introductionways of foreign technology, one of which is direct introduction of foreignadvanced technology with indirectly spilling over advanced technology to thehost country through demonstration effect brought by FDI and competitioneffect as the other way. As for the aspect of the relationship between theintroduction of foreign technology and innovation ability, the vast majorityof literatures have focused on the influence of the spilling over of FDItechnology upon the enhancement of innovation ability. Making use of paneldata of sub-industries, Sha Wenbing and Sun Jun (2010)  have studied theinfluence of spilling over FDI knowledge upon the innovation ability ofChina’s high-tech industry, considering that the research and developmentactivities of foreign enterprises have promoted the enhancement of innovationability of domestic enterprises to a certain extent. Jing Pan and ZhangJiarong (2012)  have studied the influence of the research and developmentinvestments of multinational companies in China upon the innovation ability ofChina’s high-tech industry from four aspects.Based on above studies, we can know that FDI has a certain influence uponinnovation ability of high-tech industry but the influence of technologyimports upon innovation ability of high-tech industry remains to be studied;Using the panel data of high-tech industry of 26 provinces in China from 1999to 2012, this paper has carried out an empirical study on independent researchand development as well as the relationships between the domestic technologytransfer and foreign technology imports and the innovation ability and hasanalyzed the result of the study with finally putting forwards thecorresponding countermeasures and recommendations.2. Model and Data2.1. Model StructureCobb-Douglas function is the most commonly used form of production function,which can be shown as follows:(1)where, and respectively represent the output of the region i in the year t,the material capital investment and the human capital investment. α and βrespectively represent the output flexibility of material capital investmentand the output flexibility of human capital investment. represents totalfactor productivity, meaning all other factors influencing the output exceptmaterial capital investment and human capital investment.In the view of investment and output, innovation activities of enterprises canbe shown in terms of production function, where the innovation ability can beknown as the output form of innovation activities of enterprises. However, inthe specific analysis, it is usually very difficult to find an index todirectly measure the innovation ability. The existed methods to measureinnovation ability are divided into two categories: One is selecting thesubstitute variable of innovation ability; Xian Guoming and Yan Bing (2005) as well as Li Xuedong (2011)  have selected three output indexes, whichare patent application amount, new products and the growth rate of technicalprogress, as substitute variables and have investigated the influence of FDIupon enterprise innovation; The other is establishing evaluation index systemfor measuring innovation ability to comprehensively evaluate the innovationability of enterprises from many aspects, such as the investment, the outputand so on; Zhang Huasheng (2006)  has established an analytical frameworkto carry out the empirical analysis of innovation ability of manufacturingindustry.Starting from building a production function that can reflect the innovativeactivities of enterprises, this paper has analyzed the influence of differenttechnical improvement ways upon the innovation ability. Therefore, continuingto use Xian Guoming and Yan Bing’s (2008)  processing method, taking theamount of patent applications as the measurement index of innovation ability,this paper has built the following production function on the basis of C-Dfunction:(2)PAT is the total amount of patent applications in Equation (2); RDE is theexpenditures for the research and experimental development (R & D) and L isthe equivalent for full attendance of R & D staff, respectively representingthe output and investment of innovation activities. Representing the totalfactor productivity, A refers to all other factors affecting the innovationability except R & D expenditure and the equivalent for full attendance of R &D staff. In the innovation activities of enterprises, not only influenced bythe independent research accumulated in previous “learning by doing”, theimprovement of innovation ability of total factor productivity may also bepromoted by the introduction of domestic and foreign technology. Therefore, wedefine the total factor productivity as:(3)RDS is the R & D expenditure stock in Equation (3); FTI is the foreigntechnology imports stock; DTP is the domestic technology transfer stock; CAPis the stock of material investment and SIZE is the scale of an enterprise.Because the influence of all innovation activities of enterprises upon theinnovation ability has a long-term characteristic, thus the expenditure stocksof all technology activities are considered to be added in the model.Additionally, various innovation activities of enterprises in the currentperiod will be affected by all previous technology activities, so in Equation(3), the innovation ability in period t is the function of the technologyactivities’ stock in period t-1. Meanwhile, the innovation activities cannotbe carried out without the investment of material capital and the scaledifference may also influence the improvement of enterprises’ innovationability. These two influential factors are also included in the model ascontrolled variables. A is a constant term and bi represents the observedindividual effect.Bring Equation (3) into Equation (2) and take logarithm on both sides of theequation, implying that:(4)Equation (4) determines the basic form of the measurement model of the paper;reflects individual effect; Parameters α and β respectively are the R & Dexpenditure of innovation ability and the flexibility of the investment oftechnical personnel; γ1, γ2 and γ3 respectively represent R & D expenditurestock, the foreign technology imports stock and the output flexibility ofinnovation ability of domestic technology transfer stock; γ4 and γ5 reflectthe influence of material investment stock and enterprises’ scale uponinnovation ability.2.2 Variable Selection and Data Sources2.2.1. Stock of R & D Expenditure, Foreign Technology Imports and DomesticTechnology TransferAs factors of influence the enterprise innovation ability, R & D spending andtechnology at home and abroad all use the perpetual inventory method tomeasure. Stock of R & D spending, for example, if the depreciation rate is,the calculation formula is:(5)Firstly, determine the initial stock and the depreciation rate. Set before thesample period (before 1999) all R & D spending at an average growth rate of g,base stock of R & D expenditure can be expressed as:(6)According to the measurement of Wu Yanbing, the average annual growth rate ofR & D expenditure in our country is 5% and R & D inventory depreciation is setup at the rate of 15%, namely the base stock of R & D spending is 5.25 timesof the base period of R & D expenditure. This paper uses the above methods tomeasure the expenditure that involved in the enterprise technical activities.The depreciation rate of foreign technology imports stock and domestictechnology transfer stock the depreciation rates are 15% and 25% and also setthe average annual growth rate as 5% about the foreign technology importsstock and domestic technology transfer stock before the sample. Finally, thetechnical activities spending are deflated into the actual value. Using theprice index of investment in fixed assets in 1998 as the base period andmaking adjustment about the stock of R & D expenditure, technology imports anddomestic technology transfer. So we can reach a conclusion that the averagevalue about the spending of the high-tech industry in 26 provinces from 1999to 2012.2.2.2. R & D Expenditure, Material input Stock and Enterprise SizeIn the name of the R & D expenses in different provinces and considering thevolatility of price and using price index of investment about the fixed assetsto deflate for its actual value. The material input of the enterprise willhave an important influence on enterprise’s innovation activities in the longrun. Material input is generally measured by fixed assets and to estimate theinvestment of fixed assets in the stock of high-tech industry also use theperpetual inventory method. For depreciation rate and base stock can referencethe methods of Zhang Jun et al. (2004)  . They set the depreciation rateof fixed asset investment is 9.6% and assuming the base stock is 10 times thevalue of fixed assets and finally use the price index of investment in fixedassets to deflate for actual value.There is a lack of unified standard to measure the enterprise size. Zhou Li’an(2005)  uses the formally hired workers in the enterprises in a region andthe average output as the two indexes to measure the proxy variables ofenterprise size. This paper continues to use this kind of treatment method toconsider the availability of data and it also uses the average income of thehigh-tech industry as a measurement of the enterprise size. The number of theprovincial high-tech industry companies and the main business income are allderived from the China statistical yearbook of science and technology.In this paper, the data of empirical model all derived from the Chinastatistics yearbook on high technology industry and China statisticalyearbook. Patent filings, R & D expenditure, technology import spending athome and abroad and material capital input data are derived from the Chinastatistics yearbook on high technology industry. To avoid price fluctuationson the impact of variables, using the corresponding price index of differentprovinces to translate the nominal value for the actual value. And theinvolved price index of the investment in fixed assets and the price index ofindustrial products are from the China statistical yearbook and there is alack of two years price index of investment in fixed assets in Guangdongprovince, with the nation’s price index of investment in fixed assets instead.In China’s 31 provinces, the data of high technology industry in InnerMongolia, Hainan, Qinghai, Tibet and Xinjiang are partially missing and theyare excluded from the sample. R & D related data statistics of high technologyindustry in China is later and can only get the statistics after 1998. At thesame time, (4) involved in the lag issue of stock of the technical activitiesof spending, so the time series of analyzing samples is from 1999 to 2012. Inthe end, this paper selects the panel data of high technology industry as theeconometric model samples in 26 provinces of China from 1999 to 2012.3. The Estimated Results and Discussion3.1. Basic Estimation ResultsMeasurement model in this paper is Equation (4). For the possible problem inits direct return is that the control variables may be related to R & Dinvestment and enterprise in the process of the technological progress ofactivities and the spending during the various technical progresses may alsobe relevant. And the multicollinearity problems will make the coefficientestimator can not accurately reflect and explain the influence of variables tobe explained and to avoid this kind of influence as much as possible. Thisarticle adopts the method of stepwise regression. For each step regressionmodel selecting, all depending on the fixed effects and the Hausman testresults of the random effects.As can be seen from the estimated results in Table 1, the enterprise R & Dfunds and personnel input as important input variables and for the influenceof innovation ability is significant. Join the enterprise R & D expenditurestock, foreign technology imports stock and domestic technology transfer stockin Columns (3) to (5), the results show that the domestic technology transferstock coefficient estimate is not significant. But according to the purpose inthis paper, spending of the enterprise technology activities all haveimportant economic significance, therefore should not eliminate variables.Column (6) included all explanatory variables in the econometric model and canbe seen from the estimated results that the inputs of enterprise R & D have asignificant impact on innovation ability. In the kinds of activities aboutenterprise technology, the effects of the R & D expenditure stock oninnovation ability has the largest influence and it followed by the foreigntechnology imports stock. And the domestic technology transfer stock has nosignificant impact on the innovation ability. The larger size of enterpriseand capital stock also has positive impact on the improvement of enterpriseinnovation ability.According to the estimated results of Equation (4), the stock of innovationability for enterprise R & D expenditure elasticity is 0.33 and it is higherthan 0.12, the elasticity of the foreign technology import stock. It showsthat to some extent on the basis of “learning by doing” that accumulatedindependent research and development ability of enterprise innovation abilitypromotion effect is superior to the technology import directly, therefore,independent research and development is the most direct way to promote theaccumulation of enterprise innovation ability. But when affirms the dominantposition of independent research and development, we should also pay attentionto technology transfer for the significant role of cultivating the ability oftechnologyTable 1. Estimation results: selecting some explanatory variables based onEquation (4).Note: FE, fixed effects model; *statistically significant at the 10% level;**statistically significant at the 5% level; ***statistically significant atthe 1% level.innovation. While there are technical barriers during the process of directlyintroducing the foreign technology may not be able to import the advancedtechnology of developed countries, but as long as the technology import issuitable for our country and it also helps to narrow the technology gapbetween our country and developed countries. And compared to the independentresearch and development, the technology import has the characteristics of lowrisk and can also reduce the uncertainty and blindness in the process ofindependent research and development. Compared with the foreign technologyimports, domestic technology transfer stock for enterprise innovation abilitypromotion effect is not significant, this may be due to the big gap betweenthe technology level of domestic enterprises and overseas technical level andit may also be the concept of maintaining their own technological advantagesfor the domestic enterprises, so it will not transfer its truly technologythat is the core of the competitiveness of enterprises. So the domestictechnology cannot be directly promoted the innovation ability.3.2. The Absorptive Capacity of R & D and Innovation AbilityIn order to analyze the relationship between the domestic technology transferstock and R & D. On the basis of the Equation (4), the introduction ofdomestic technology transfer stock and cross terms of R & D expenditure andthus build the following econometric model:(7)In Equation (7), as the constant term, for individual effects and as randomitems. On the basis of (7) to introduce foreign technology import stockcontinuously and the cross terms of R & D expenditure, if the overlappingcoefficient is positive and then it indicates that there exists complementaryeffect between them. The model can be expressed as the Equation (8) throughadjustment:(8)In (8), for the constant term, for individual effects, as random items.Estimated results of the (8) are shown in Table 2.The estimated results of Table 3 shows that the cross of is significantlypositive and it means that although domestic technology transfer can’tdirectly promote the ability of the enterprise innovation, through independentresearch and development of enterprises can indirectly promote the innovationability of ascension. The coefficient of, , was not significant and combinedwith the regression results in Table 2, the coefficient was not significantmay likely to be caused by cross terms are introduced to the result ofmulticollinearity. Coefficient estimate symbol of and does not accord withthe expected because of the cross term contained in (8). In the Column (2),remove the cross term and the not significant variable, the results showedthat by significance test under 1% confidence level, the other variablesymbols did not change. Hu et al. (2005)  use Chinese enterprise datafound that there is a complementary relationship with domestic andinternational technology transfer of R & D. Independent research anddevelopment not only can directly promoted the promotion of the enterprise’sinnovation ability and it also has positive influence on imitating, digestingand absorbing foreign and domestic technology.3.3. The Regional Differences of the Innovation AbilityThere is a big difference among economic basis and the technical level ineastern, central and western regions in China and there is also a largeimbalance between regional research and development ability and technologyimports and transfer, independent research and development and technologyimports and transfer for the influence of the innovation ability may also showdifferent characteristics. In order to analyze the regional differences, thisarticle subdivided into features of the 26 provinces into three samples and atthe basic model of (4), the results as shown in Table 3.Estimating result from Table 3 shows that domestic technology transferspending for eastern and central allTable 2. Estimation results: based on (8).Table 3. The measurement results of innovation capability among the eastern,central and western regions.did not significantly influence the innovation ability of ascension and thisalso obtained the results when using the same sample. R & D spending andforeign technology import spending and stock of R & D spending for theinfluence of innovation ability in all areas present a bigger difference: inthe eastern region, R & D expenditure, foreign technology introduction and R &D spending stock for regional innovation ability showed a significant positiveimpact on the ascension; In the central region, R & D expenditure stock and R& D expenditure have a significant positive effect on promoting regionalinnovation ability. However, foreign technology import spending has nosignificant effect to the promotion of innovation ability; Only R & Dexpenditure in the western region has significant positive effect on promotinginnovation capacity and it’s important to note that domestic technologypurchased coefficient showed significant negative impact on the innovationability and this maybe because in the western region for the transfer of thelack of domestic technology digestion and absorption ability can’t play therole of the purchase technology.Features of this three areas show the main reason of the differences is thatthe development level and degree of opening in eastern region economic to theoutside world are significantly higher than the central and western areas,which created the conditions for the introduction of foreign technology. Andthe enterprise in eastern part is better in the process of independentresearch and development experience and it also makes the foreign technologybe fully digested and absorbed and it ultimately plays a better role inascending enterprise innovation in eastern. For the Midwest, in the process ofimproving the innovation ability, independent research and development playedan irreplaceable role and at the same time of continuing to pay emphasis onindependent research and development we should also create conditions for theintroduction of complementary technology so as to fill the blank of theexisting technology.4. Conclusions and Policy SuggestionsThrough inter-provincial panel data of high-tech industry, this paper analyzesthe independent research and development also analyzes the effect of theintroduction of international technology to enhance innovation capability.Results show that R & D spending and the introduced foreign technology for theability of the enterprise innovation all have significant positive effect,while the influence on enterprise innovation ability is not significant fromthe aspect of the purchase of domestic technology. Meanwhile, the company’sindependent research and development will not only directly contribute to thepromotion of innovation, its digestion and absorption of technology at homeand abroad also have a positive impact. With the deepening of market-orientedreform in China, independent research and development should be furtherstrengthened in its leading position in enterprise innovation capability. Andto create a favorable external environment and strengthen the protection ofintellectual property rights for enterprise innovation and R & D activitieshave an important significance. In addition, on the one hand, we shouldincentivize independent research and development but on the other hand weshould also pay attention to the introduction of technology which can promotethe innovation capacity. Through encouraging the integration of independentresearch and development and technology, enhancing their innovation capabilityof enterprises and continuously promoting technological progress, theinnovation capability can be improved.At the same time of continuously advancing our innovation capability, weshould also pay attention to regional differences. This paper analyzes andshows that the introduction of technology in the Midwest does not have asignificant role in promoting the innovation capacity. At this stage, duringthe process of improving the innovation capability through independentresearch and development in the central, east and west, it should concernabout the introduction of technology to strengthen the self-development andaccumulation of the self-research, adjust measures to local conditions, putforward corresponding innovation incentives and comprehensively enhance theregional innovation ability. So, the development of regional economy can bebalanced.