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Is quality capability a key factor to enterprise innovation?--New findings based on China Employer-Employee Survey

March 2, 2019
​Cheng Hong, Chen Wen-jin

Abstract: Technological innovation is one of the most important driving forces of enterprise development and economic growth. The existing research based on the analysis of external institutional environment and internal factor input has failed to explain the problem of low efficiency of R&D and innovation in some enterprises. Based on the research above, this paper conducts a comprehensive empirical study on the impact of quality capability on R&D innovation efficiency and its channels, using the latest first-hand enterprise survey data. The study found that: First, as an important complementarity of R&D innovation, quality capability significantly enhances the efficiency of R&D innovation, and enhances the innovation output represented such as new products sales and patents. Second, inside quality capability, quality Demand satisfaction capability plays the most important role in R&D innovation efficiency improvement. That is, quality capability mainly improves the innovation output by guiding enterprises to focus the R&D input on meeting customer’s needs in the market. Third, the auxiliary regression results show that quality capability promotes the participation of entrepreneurs, participation of management and non-R&D personnel in R&D innovation, promotes R&D cooperation between enterprises and external organizations, promotes data using in decision-making, and enhances management efficiency, the effects above are potential mechanisms for improving the efficiency of R&D innovation. Based on this, this paper suggests that the government should change the policy of innovation support policy. In addition to the innovation subsidy, the government should also emphasize the help of enterprises to improve the quality of supporting facilities. We also should encourage enterprises to introduce professional consulting services, comprehensively enhance the endogenous ability of enterprises. We should guide enterprises to establish a market-oriented view of innovation, make sure the main direction of R&D innovation will be satisfying customer needs.


Keywords: Quality Capability; R&D Innovation; Enterprise Capability; China Employer-Employee Survey; Management Efficiency