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Innovation responses of Japanese firms to Chinese import competition

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  • Nobuaki Yamashita
  • Isamu Yamauchi

Abstract

This paper examines innovation responses of a panel of Japanese firms to the intensified import competition from China in the period 1995–2005. We build a comprehensive firm‐level dataset linking patents and R&D merged to cross‐industry measures of Chinese import competition. Accounting for a simultaneity bias between innovation and importing and the possible heterogeneous effects across firms, we found that patenting has increased in response to an influx of Chinese imports, but it has adversely affected the quality of innovation, measured by forward citations received. These effects are only observed for globally engaged firms, not for firms focusing on the domestic market.

Suggested Citation

  • Nobuaki Yamashita & Isamu Yamauchi, 2020. "Innovation responses of Japanese firms to Chinese import competition," The World Economy, Wiley Blackwell, vol. 43(1), pages 60-80, January.
    • Handle: RePEc:bla:worlde:v:43:y:2020:i:1:p:60-80
    DOI: 10.1111/twec.12843
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    Cited by:

    1. Gu, Grace & Malik, Samreen & Pozzoli, Dario & Rocha, Vera, 2024. "Worker reallocation, firm innovation, and Chinese import competition," Journal of International Economics, Elsevier, vol. 151(C).
    2. Masami Imai & Michiru Sawada, 2022. "Does a Financial Crisis Impair Corporate Innovation?," Wesleyan Economics Working Papers 2022-002, Wesleyan University, Department of Economics.
    3. Akira Sasahara, 2022. "The Empirics of the China Trade Shock: A Summary of Estimation Methods and A Literature Review," Keio-IES Discussion Paper Series 2022-008, Institute for Economics Studies, Keio University.
    4. Ito, Keiko & Ikeuchi, Kenta & Criscuolo, Chiara & Timmis, Jonathan & Bergeaud, Antonin, 2023. "Global value chains and domestic innovation," Research Policy, Elsevier, vol. 52(3).
    5. Mauro Caselli & Stefano Schiavo, 2020. "Markups, import competition and exporting," The World Economy, Wiley Blackwell, vol. 43(5), pages 1309-1326, May.
    6. Shuhei Kainuma & Yukiko U. Saito, 2022. "China's impact on regional employment: Propagation through input–output linkages and co‐location patterns," The World Economy, Wiley Blackwell, vol. 45(11), pages 3559-3601, November.
    7. Yuki HASHIMOTO, 2020. "Global Competition, Worker Retention, and Immigrant Employment in Manufacturing SMEs," Discussion papers 20071, Research Institute of Economy, Trade and Industry (RIETI).
    8. Klaus Friesenbichler & Andreas Reinstaller, 2021. "Do Firms Facing Competitors from Emerging Markets Behave Differently? Evidence from Austrian Manufacturing Firms," WIFO Working Papers 625, WIFO.
    9. Kazunobu HAYAKAWA & Tadashi ITO & Shujiro URATA, 2022. "Impacts of Increased Chinese Imports on Japan’s Labor Market: Firm and Regional Aspects," Discussion papers 22037, Research Institute of Economy, Trade and Industry (RIETI).
    10. Yukiko SAITO & Shuhei KAINUMA & Michal FABINGER, 2020. "China's Impact on Regional Employment: Propagation through Supply Chains and Co-agglomeration Pattern," Discussion papers 20054, Research Institute of Economy, Trade and Industry (RIETI).
    11. Klaus S. Friesenbichler & Agnes Kügler & Andreas Reinstaller, 2021. "The Impact of Import Competition from China on Firm-level Productivity Growth in the EU," WIFO Working Papers 623, WIFO.
    12. HASHIMOTO, Yuki, 2025. "Global competition and labor-intensive production in SMEs: Firm-level evidence from Japan at the threshold of the lost decades," Journal of the Japanese and International Economies, Elsevier, vol. 75(C).
    13. S, Minkyu., 2021. "The impact of trade on R&D: Evidence from UK firms," Cambridge Working Papers in Economics 2151, Faculty of Economics, University of Cambridge.
    14. Mark Vancauteren & Ahmed Boutorat & Oscar Lemmers, 2024. "Import Competition, Destinations, and Firms’ Patent Strategies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4284-4314, March.
    15. Wang, Kunlun & Zheng, Leven J. & Lin, Boqiang, 2024. "Demand-side incentives, competition, and firms’ innovative activities: Evidence from automobile industry in China," Energy Economics, Elsevier, vol. 132(C).

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