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How does domestic market fragmentation affect enterprise innovation performance? Empirical evidence from China

Xiao-Feng Qi (China Institute of Regulation Research, Zhejiang University of Finance and Economics, Hangzhou, China) (The New Type Key Think Tank of Zhejiang Province, China Research Institute of Regulation and Public Policy, Hangzhou, China)
Lihong Zhou (School of Economics, Zhejiang University, Hangzhou, China)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 11 August 2022

Issue publication date: 19 March 2024

215

Abstract

Purpose

This paper aims to explore the impact of domestic market fragmentation on the innovation performance of enterprises and its mechanism from the perspective of market segmentation, a government behavior with Chinese characteristics.

Design/methodology/approach

In order to verify the theoretical hypothesis proposed in the previous article, that is, whether domestic market fragmentation can effectively improve the innovation performance of enterprises, this paper bases on the data of listed companies from 2010 to 2016, empirically testing the theoretical hypothesis by constructing a measurement model.

Findings

Domestic market fragmentation has a significant inhibitory effect on enterprise innovation performance. Domestic market fragmentation has heterogeneous effects on innovation performance of enterprises and regions. It is undeniable that domestic market fragmentation does have a certain support effect on state-owned enterprises but the support effect is achieved by distorting regional resource allocation and creating an unfair market environment.

Originality/value

Firstly, this paper explores the impact mechanism of domestic market fragmentation on corporate innovation performance from the perspective of market segmentation, a government behavior with Chinese characteristics, so as to expand and enrich the relevant research on enterprise innovation. Secondly, from the perspective of corporate innovation performance, this paper provides new evidence for the “curse effect” of domestic market fragmentation. Thirdly, this paper tries to shake the domestic market fragmentation support theory from the perspective of distortion effect brought by the “hand of support” of domestic market fragmentation.

Keywords

Citation

Qi, X.-F. and Zhou, L. (2024), "How does domestic market fragmentation affect enterprise innovation performance? Empirical evidence from China", International Journal of Emerging Markets, Vol. 19 No. 4, pp. 1007-1025. https://doi.org/10.1108/IJOEM-11-2019-0945

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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