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Will the Rise of Land Cost Compel Manufacturing Industry Innovation? |
Gong Guangxiang |
Institute for the Development of Central China,Wuhan University,Wuhan 430072,China |
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Abstract The impact of land cost on the firm's innovation behavior with the business environment of Chinese enterprises had been studied in this study,by using the business environment survey data of World Bank.This study employed Heckman two-stage model to correct sample select bias while the problem of endogeneity has been overcome by using instrumental variables technique.Results of the study reveals that rising land cost not only exerts pressure on the firms in terms of their survival but also forces enterprise innovation.Apart from this,the aforesaid cost improves the overall business innovation,and scale of enterprise innovation investments.Analysis of different types of business heterogeneity further indicates that the rising cost of land have increased the scale of innovation investment of non-state-owned,high-efficiency,and export-oriented enterprises in the eastern China,on the other hand,there is no significant impact of aforesaid cost on the state-owned,inefficient,and non-export-oriented enterprises in Central,and Western China.From the above discussion,there is indication that the innovation of enterprises is an endogenous choice of their own development.Though enterprises are facing an increase pressure of external environment and enjoying preferential policies,innovative enterprises with weak foundation will be less innovative,enterprises that are under high pressure and have a certain foundation will highly innovate.
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Received: 21 August 2018
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