Analysis on the Enterprises’ Innovation Quality Based on the Patent Value: A Comparison between Public and Private Enterprises in China

Abstract

To investigate Chinese enterprises’ innovation quality and examine how it is determined by the enterprise ownership, this paper uses about 73.8 thousand invention patents applied by Chinese enterprises during 1985–2011 in estimating patent return based on the renewal period. We take patent return to be the measurement of innovation quality, and make a comparison between public and private enterprises. We find that the innovation quality of public enterprises is improved after restructuring, but is still lower than that of private enterprises. We may find the causes of the innovation quality differences from the allocation efficiency of R&D resources. Monopolized enterprises own higher innovation quality by monopolizing industry resources, which leads to a low R&D resources allocation efficiency. In comparison, the R&D resources allocation efficiency of public enterprises in the competitive industry is higher than that in monopolized enterprises. R&D resources allocation efficiency is generally inversely proportional to the public owned level, and proportional to the market competition level. This study generates an important policy implication, that is, the social R&D resources allocation efficiency of China would be improved by disposing part of R&D resources monopolized by public research institutes and public enterprises to private enterprises.