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Can institutional openness policies enhance corporate technology innovation efficiency?Evidence from the establishment of Free Trade Zone

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  • Li, Yan

Abstract

The establishment of Free Trade Zones (FTZs) is a testing ground for deepening reform in the new era. It is a significant endeavour for China to investigate institutional innovation, execute an innovation-driven development strategy, and raise the quality of economic development. This study examines a sample of Chinese A-share listed companies from 2009 to 2022 and explores the positive relationship between institutional openness, represented by China's Free Trade Zone, on corporate technology innovation efficiency. The findings highlight that introducing China's Free Trade Zone can strengthen corporate technology innovation efficiency. Furthermore, the stimulating impacts of China's Free Trade Zone on corporate technology innovation efficiency are attained through alleviating corporate financing constraints and facilitating innovative knowledge flow. Heterogeneous analysis confirms that firms' ownership and industry nature play a critical role. The findings demonstrate how institutional openness can enhance stimulate corporate technology innovation efficiency, support the critical role of openness in stimulating corporate technology innovation capability, and contribute to further institutional openness.

Suggested Citation

  • Li, Yan, 2025. "Can institutional openness policies enhance corporate technology innovation efficiency?Evidence from the establishment of Free Trade Zone," International Review of Economics & Finance, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:reveco:v:97:y:2025:i:c:s1059056024007469
    DOI: 10.1016/j.iref.2024.103754
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    1. Wang, Tianchen & Wu, Xuesong & Mi, Qun, 2025. "Institutional openness and the labor income share of enterprises - A decade and a half of empirical evidence from China's free trade zones," Global Finance Journal, Elsevier, vol. 68(C).
    2. Guo, Juanjuan & Wang, Shihao & Liu, Chang, 2025. "The real effect of pilot free trade zones: Evidence from shadow banking activities," Economic Analysis and Policy, Elsevier, vol. 88(C), pages 756-774.
    3. Tao, Sha & Tang, Ruixia & Ke, Haisheng, 2026. "High-tech product trade, international financial openness, and global competitiveness: An empirical analysis based on country-level data," Finance Research Letters, Elsevier, vol. 88(C).
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    5. Ma, Chiyu & Xiang, Yijun, 2025. "Can institutional opening-up enhance enterprise innovation quality?," International Review of Economics & Finance, Elsevier, vol. 101(C).
    6. Liu, Yanping & Xie, Jie & Du, Yunsu & Zhang, Yu, 2026. "Institutional openness and upgradation in the global value chain of manufacturing: Evidence from Chinese micro-enterprises," International Review of Economics & Finance, Elsevier, vol. 105(C).

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