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Social trust and firms' innovation in Chinese provinces (CIMR debates in Public Policy)

When: —
Venue: Online

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Join the Centre for Innovation Management Research on Wednesday 5 July 1-2pm for an online lunchtime seminar on social trust and firms’ innovation in Chinese provinces  

The online debate is part of the CIMR Debates and Workshops in Public Policy series.

Panel

  • Chair: Dr Grace Bo Peng, Department of Management, Birkbeck, University of London

  • Dr Luca Andriani, Department of Management, Birkbeck, University of London 

  • Discussant: Professor Chunyan Zhou, Co-founder/CEO of the Triple Helix Institute

Abstract 

China has emerged as an extraordinary and dynamic economy in the 21st century, characterized by vast territory and significant socio-economic and institutional heterogeneity across its provinces. Exploring the contextual factors that facilitate innovation in this market is of paramount importance, especially for targeted regional policy implications. In this study, we examine social trust as a collective asset and its potential impact on firm innovation in Chinese provinces. Our conceptual framework draws upon influential works in economic geography and institutional studies literature. Through empirical investigation and panel analysis, we leverage data from 2012 to 2018 to shed light on this relationship. Our baseline model specifications reveal a positive correlation between social trust and firms' innovation, measured by the number of patents output. As the level of social trust increases within a given context, firms exhibit a higher degree of innovation.

We extend our model to consider the influence of firms' financial conditions, specifically their financial constraints. Additionally, we examine the quality of regional government institutions. Our findings suggest an even more pronounced positive effect of social trust on firm innovation among financially constrained firms and in regions with lower quality government institutions. In regions where formal institutions are highly functional, social trust appears to lose significance, indicating a substitution effect between formal and informal institutions.

By considering the interplay between formal and informal institutions, our findings suggest the need for tailored regional policies to effectively promote innovation in different regions. More specifically, policymakers should recognize the specific contextual factors and regional institutional aspects, when designing regional policies that support innovation and economic growth.

This work is co-authored with:

Fu Zixuan, Renmin University of China, Beijing

Gaygysyz Ashyrov, Estonian Business School-Tallin, Estonia  

Biographies 

Grace, Bo Peng is a lecturer in management in Birkbeck, University of London. She completed her doctoral training at the Bayes Business School, City University London in 2017, and have developed broad research interests covering the areas of the entrepreneurial finance and exit strategies, tourism demand analysing, as well as experimental methods applied in entrepreneurship research. Her doctoral dissertation focuses on entrepreneurial finance and exit strategies based on a dataset of entrepreneurial firms listed for the first time in the LSE and Alternative Investment Market.

The first study extends our understanding of the categorical imperative that financial markets impose on listed firms, by exploring how the category spanning behaviour of the founders harms their resource acquisition via IPO, as well as the way they offset such penalty, which has been published in Organization Science in 2023. The second study explores variance in the exit decisions of founders after IPO, and examines factors explaining these decisions, which has been accepted to be published in Academy of Management Journal in 2020. Her publications have also appeared in Tourism Management and Journal of Travel Research.

Luca Andriani is a Senior Lecturer (Associate Professor) of Economics at Birkbeck University of London, founder Co-Director of the Centre for Political Economy and Institutional Studies (Birkbeck), and founder Director of the Video Series 5-Minute. His research focuses on examining the role of social norms, values and trust on the governance of the state-citizens relationship, as well as on the impact of cognitive aspects on individual’s attitudes towards corruption and tax evasion. His work has been published in different top field journals such as the Cambridge Journal of Economics, Kyklos, the Journal of Institutional Economics, Spatial Economic Analysis, the Journal of Economic Issues, Strategic Change, the Review of Social Economy. With Dr Randolph Bruno he has recently guest edited a special issue for the Journal of Institutional Economics titles “Institutions and Culture in Economic Contexts”  

Chunyan Zhou is the Co-founder/CEO of the Triple Helix Institute. She received a Ph.D. in Science and Technology Innovation from Northeastern University in China, a B.S. and a M.S.in Physics. Her research concerns Triple Helix theory and practice, entrepreneurial university, regional development strategy and entrepreneurial policy. She published From Science to Technology: The Scientific Basis in the Technological Era (2002) and The Triple Helix (2017, with Henry Etzkowitz). Her key contributions include “triple helix field and circulation”, “government-pulled triple helix,” and “Triple Helix Twins” for innovation and sustainability.

Prof. Zhou served as Director of Discipline Development in Shenyang University, Guest Professor of Northeastern University, and visiting professor Tsinghua University. She was invited to Stanford University as a Visiting Scholar in STS, as well as Stony Brook University, Newcastle University (UK) and Complutense University of Madrid. She was Director of International Institute of Triple Helix (Lassalle, Spain) and senior researcher at Mid-Sweden University (Sweden) before she came to the USA.

Further Reading

Andriani, L Angelini, P P and Filippetti, A (2023) Civic engagement and socio-economic proximity in urban areas. Spatial Economic Analysis, DOI: 10.1080/17421772.2023.2180532

Andriani, L and Bruno, R (2022) Introduction to the Special Issue on Institutions and Culture in Economic Contexts. Journal of Institutional Economics, 18(1): 1-14

Kaasa, A and Andriani, L (2022) Determinants of institutional trust: the role of cultural context. Journal of Institutional Economics, 18(1): 45-65

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