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The Impact of Government Competition on Regional R&D Efficiency: Does Legal Environment Matter in China’s Innovation System?

Author

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  • Baocheng He

    (School of Economics and Management, Shaanxi University of Science and Technology, Xi’an 710021, China
    School of Management, Xi’an Jiaotong University, Xi’an 710049, China)

  • Jiawei Wang

    (School of Economics and Management, Shaanxi University of Science and Technology, Xi’an 710021, China)

  • Jiaoyang Wang

    (School of Economics and Management, Shaanxi University of Science and Technology, Xi’an 710021, China)

  • Kun Wang

    (School of Management, University of Bath, Bath BA2 7AY, UK)

Abstract

Local governments are encouraged to compete in R&D investments and activities in China’s innovation system. We aim to understand the influence of government competition on regional R&D efficiency. We are also interested in examining how the attributes of legal environment act as a moderating variable for the relationship between government competition and R&D efficiency. We developed Tobit spatial models with spatial panel data of 30 provinces of China in 2008–2016. The results show that: (1) There exists spatial dependence of R&D efficiency, and the regions with high efficiency have “spillover effect” on the surrounding areas. (2) Government competition has a significant promoting effect on R&D efficiency and/or R&D efficiency spillover. Specifically, government competition has both R&D efficiency promotion and R&D efficiency “spillover” promotion in Eastern China, only R&D efficiency positive spillover promotion in Middle-area and R&D efficiency promotion but negative spillover in Western China. (3) The impact of government competition on efficiency is affected by the legal environment, and the promotion effect of government competition only exists in good legal environment. The results of this study reveal an important way to improve R&D efficiency by establishing a new R&D competition mechanism for local government which is oriented by efficiency and ruled by the legal environment.

Suggested Citation

  • Baocheng He & Jiawei Wang & Jiaoyang Wang & Kun Wang, 2018. "The Impact of Government Competition on Regional R&D Efficiency: Does Legal Environment Matter in China’s Innovation System?," Sustainability, MDPI, vol. 10(12), pages 1-18, November.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:12:p:4401-:d:185306
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    3. Pawel Dobrzanski, 2018. "Innovation expenditures efficiency in Central and Eastern European Countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(2), pages 827-859.
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    6. Yang, Bofei & Zhu, Shengjun, 2022. "Public funds in high-tech industries: A blessing or a curse," Socio-Economic Planning Sciences, Elsevier, vol. 83(C).

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