R&D inputs, firm size and innovation performance: Evidence from Chinese high-tech industry

This paper investigates the influence of R&D inputs on the innovation efficiency of Chinese high-tech industry from two aspects, including product-related innovation and knowledge-related innovation. We also test whether or not the Schumpeterian hypothesis can be applied to the innovation performance of Chinese high-tech industry when considering the interactive effects among firm size, ownership and profitability. Using a panel data of 12 industries during the period of 1996-2005, R&D expenditure is found to have a positive and significant impact on innovation performance. Besides, R&D labor makes significant contributions to product-related innovation but does not have impact on the efficiency of knowledge-related innovation. We find firm size per se has negative impact on the efficiency of product-related R&D, but its complementarities with profitability and ownership lead to positive impact on efficiency in product-related R&D. The economies of scale deriving from firm size are observed in knowledge-related innovation.