The roles of knowledge assets in promoting firm productivity and innovation in China

• Main Author: YANG, Jingsi
• Format: Others
• Language: en
• Published: Digital Commons @ Lingnan University 2016
• Subjects: Economics
• Online Access: https://commons.ln.edu.hk/econ_etd/29; https://commons.ln.edu.hk/cgi/viewcontent.cgi?article=1029&context=econ_etd

This paper investigates how intangible knowledge assets impact upon the firm’s products and the output of new products through a large panel data set covering all manufacturing firms from the period of 1998-2007. We hypothesize that more knowledge assets have a positive impact on total factor productivity and the ratio of new products to total products, but only up to a point, due to the importance of complementary assets. The inverse quadratic relationship found in the relationship between the ratio of knowledge assets to total assets and TFP suggests that it is necessary to balance knowledge assets with complementary assets in order to achieve a higher degree of productivity. However, the positive effects of intangible asset ratio on the proportion of the output of new products in that of total products suggest that new products always increase with knowledge assets, because products are the prerequisite for one firm to benefit from its knowledge assets. The results are robust in all firms with different ownership types, including foreign, state-owned and private groups or all those with different motivations (international-market oriented vs. domestic-market oriented). These results are still robust after considering the effects of R&D expenditure whose effects on firms are discussed more in the literature, however, as an important channel for knowledge assets accumulation, R&D cannot be completely equal to the generated knowledge assets one firm has.