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Does Higher Education Promote Firm Innovation in China?

Author

Listed:
  • Xia Pan

    (School of Statistics and Mathematics, Central University of Finance and Economics, Beijing 100081, China
    X. Pan and Y. Gao share the first co-authorship.)

  • Yuning Gao

    (School of Public Policy and Management, Tsinghua University, Beijing 100084, China
    X. Pan and Y. Gao share the first co-authorship.)

  • Dong Guo

    (The Earth Institute, Columbia University, New York, NY 10115, USA)

  • Wenyin Cheng

    (Institute for Contemporary China Studies, Tsinghua University, Beijing 100084, China
    Institute of Developing Economies—JETRO, Wakaba 3-2-2, Mihama, Chiba 2618545, Japan)

Abstract

Endogenous growth theories have underpinned the pivotal role of education in innovation. However, our empirical study uncovers a mixed effect of higher education on firm innovation in China. Using Chinese Patent Census Data, a unique dataset, this paper is able to quantify innovation in China by incorporating a quality dimension for the first time. By merging the patent data with the Chinese Industrial Enterprise Database and province-level data on education, we find that the number of higher education institutions has a negative impact on firm-level innovation. However, the quantity of elite higher education institutions at the provincial level exerts a positive impact on firm innovation. In addition, heterogeneity analyses show that the effect of elite higher education on firm innovation is significantly positive for privately owned enterprises, but insignificant for state- and foreign-owned enterprises. Furthermore, the positive effect of elite higher education on innovation in high-tech industries is larger than in other industries.

Suggested Citation

  • Xia Pan & Yuning Gao & Dong Guo & Wenyin Cheng, 2020. "Does Higher Education Promote Firm Innovation in China?," Sustainability, MDPI, vol. 12(18), pages 1-14, September.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:18:p:7326-:d:409982
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    References listed on IDEAS

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