Enterprise rent‐seeking and high‐quality development: A perspective based on institutional deficiencies

Based on the puzzle of mismatch between China's current innovation environment construction and firms' innovation achievements, this paper uses data of Chinese A‐share listed firms and tries to explore whether rent‐seeking is a strategic choice for firms to achieve high‐quality development in the context of institutional deficiencies. This paper finds that (1) corporate rent‐seeking can significantly increase total factor productivity (TFP), a result that still holds after various robustness tests such as the instrumental variables method. The mechanism test finds that corporate rent‐seeking can significantly incentivize corporate innovation, especially high‐quality innovation. (2) Rent‐seeking has a stronger effect on TFP in high‐tech enterprises, patent‐intensive industries, and non‐overcapacity industries; institutional factors such as the reasonableness of the government‐market relationship and the degree of distortion in the factor market have a significant negative and positive moderating effect on the promotion of TFP by rent‐seeking, respectively. Further sub‐sample tests show that the TFP promotion effect of rent‐seeking in firms with stronger willingness and demand for innovation is more influenced by the institutional environment factors. The above results suggest that rent‐seeking can act as an alternative means for firms to satisfy their innovation needs in the absence of institutions, and thus increase TFP. (3) Industry‐based tests show that rent‐seeking can promote overall technological progress, but it does not have the “lubricant” effect of optimizing the allocation of resources, and rent‐seeking is always a suboptimal choice for the allocation of resources. Unlike previous studies that emphasized the negative consequences of rent‐seeking, we highlight the potential benefits of rent‐seeking in the context of China's transition economy from a total factor productivity (TFP) perspective, which enriches the research in the area of rent‐seeking and TFP.