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A Theory of Innovation: Market Transition, Property Rights, and Innovative Activity

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  • Victor Nee
  • Jeong-han Kang
  • Sonja Opper

Abstract

The aim of this paper is to specify a theory to explain why transitions to a market economy cause a shift to a higher level of innovation. Marketization increases the power of economic actors relative to political actors, increases inter-firm competition, creates new opportunities for entrepreneurship, and subsequently motivates innovative activity. For our empirical application, we focus on China's transition economy, which offers a broad range of institutional environments to examine the relation between market transition and increasing innovative activity by entrepreneurs and firms.

Suggested Citation

  • Victor Nee & Jeong-han Kang & Sonja Opper, 2010. "A Theory of Innovation: Market Transition, Property Rights, and Innovative Activity," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(3), pages 397-425, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201009)166:3_397:atoimt_2.0.tx_2-d
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    References listed on IDEAS

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    1. Nee, Victor & Opper, Sonja & Wong, Sonia, 2007. "Developmental State and Corporate Governance in China," Management and Organization Review, Cambridge University Press, vol. 3(1), pages 19-53, March.
    2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
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    Cited by:

    1. Joyce C. Wang & Jingtao Yi & Xiuping Zhang & Mike W. Peng, 2022. "Pyramidal Ownership and SOE Innovation," Journal of Management Studies, Wiley Blackwell, vol. 59(7), pages 1839-1868, November.
    2. Shuman Zhang & Changhong Yuan & Yuying Wang, 2019. "The Impact of Industry–University–Research Alliance Portfolio Diversity on Firm Innovation: Evidence from Chinese Manufacturing Firms," Sustainability, MDPI, vol. 11(8), pages 1-16, April.
    3. Shuman Zhang & Changhong Yuan & Chen Han, 2020. "Industry–university–research alliance portfolio size and firm performance: the contingent role of political connections," The Journal of Technology Transfer, Springer, vol. 45(5), pages 1505-1534, October.

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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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