Enterprise innovation in China: Does ownership or size matter?

In contrast to previous papers, where in these two important aspects of innovation were delved separately, this paper analyses the effects in unison by using the most comprehensive data on Chinese enterprises- World Bank China Enterprise Survey (2012). Our dependent variables are innovation performance measured in various dimensions: the probabilities of R&D expenditure, staff training, product innovation, process innovation and management innovation. Our key variables of interest are ownership based on largest share (SOE, private and foreign) and firm size based on the number of employees. The analysis is based on panel data approach with different dimensions added (city, industry fixed) and the interaction of ownership and size variables. Major findings suggest that SOEs and domestic private enterprises are much alike in innovation participation, but different in innovation diversification that leads to ownership specific innovative advantage. Foreign enterprises are innovative in most of the innovation measurements. Size if positively correlated to innovation. We also find that as the size of enterprise increases, ownership specific innovative advantage is subject to changeable. That implies ownership and size should be examined jointly rather than separately. The result also shows the effects of ownership and size on innovations are uneven geographically and industrially.