The Impact of Group Control on the Effectiveness of Enterprise Innovation: An Empirical Study

Abstract

Innovation has been elevated beyond the traditional forces of production, by the emergence of a new wave of industrial upgrading and the technological revolution, to become a significant force in the advancement of human society. Can an enterprise group, a significant type of industrial organization, improve the effectiveness of enterprise innovation? Here, a quantitative analysis approach was used to systematically analyze the impact of group control on enterprise innovation effectiveness and its transmission path based on the logical framework of the “policy environment-influence effect-influence path”. The study found that group control significantly improves the effectiveness of enterprise innovation compared to independently listed enterprises. The impact path showed that group control can reduce financing constraints through internal capital markets. It increases the investment in innovation and thus enhances the effectiveness of enterprise innovation. Meanwhile, internal information exchange is accelerated through the internal knowledge market, improving enterprise innovation’s effectiveness. The results of this study were still valid after robustness tests, such as propensity score matching and accounting for lag effects. According to the paper’s findings, to enhance financial support for innovation, financial market reform should be intensified. The growth of manufacturing enterprise groups should also be encouraged. Additionally, the ability of businesses to innovate while improving the internal benefits of enterprise groups and their innovation paths should be strengthened.