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Open AccessArticle

Capacity Reduction Pressure, Financing Constraints, and Enterprise Sustainable Innovation Investment: Evidence from Chinese Manufacturing Companies

1
School of Accounting, Chongqing Technology and Business University, Chongqing 400067, China
2
National Research Base of Intelligent Manufacturing Service, Chongqing Technology and Business University, Chongqing 400067, China
3
School of Business Management, Hongik University, Sejong 30016, Korea
*
Authors to whom correspondence should be addressed.
Sustainability 2020, 12(24), 10472; https://doi.org/10.3390/su122410472
Received: 11 November 2020 / Revised: 30 November 2020 / Accepted: 8 December 2020 / Published: 15 December 2020
(This article belongs to the Special Issue Business Innovation and Sustainable Development)
Resolving the problem of excess production capacity through sustainable technological innovation is an important issue facing the Chinese economy in achieving high-quality development. The Guiding Opinions of the State Council on Resolving the Contradiction of Severe Overcapacity promulgated by the government in 2013 undoubtedly had a huge external impact on the traditionally competitive manufacturing market. This paper uses 6680 company-year sample observations of 1609 A-share manufacturing listed companies in China from 2010 to 2017 to examine the impact of capacity reduction pressure on ‘corporate sustainable innovation’ (the strategic response made by the enterprise administrator to cope with the impacts of the external environment including economic, social and environmental aspects) investment and the moderating role of financing constraints on this relationship. The research shows that after the promulgation of the Guiding Opinions, the degree of overcapacity had a significant positive effect on the R&D investment of enterprises, indicating that the policy to resolve overcapacity promoted their sustainable innovation investment. Such a phenomenon indicates that, to a certain extent, in the context of capacity reduction, companies have strong pressure and motivation to seek a way out through sustainable innovation. However, financing constraints have a significant inhibitory influence on the anti-forcing effect of the capacity reduction policy, indicating that the ability of enterprises to respond to external capacity reduction policies is subject to their own limited financing. Further investigation shows that capacity reduction pressure mainly promotes the sustainable innovation investment of private enterprises and has no significant impact on that of state-owned enterprises. This may be because private enterprises struggled more for survival during the transition period. The results of this paper provide a theoretical basis and reference value for the formulation of government policies and the development of enterprises. View Full-Text
Keywords: pressure of capacity reduction; financing constraints; innovation investment; nature of property right pressure of capacity reduction; financing constraints; innovation investment; nature of property right
MDPI and ACS Style

Chen, H.; Zhong, T.; Lee, J.Y. Capacity Reduction Pressure, Financing Constraints, and Enterprise Sustainable Innovation Investment: Evidence from Chinese Manufacturing Companies. Sustainability 2020, 12, 10472. https://doi.org/10.3390/su122410472

AMA Style

Chen H, Zhong T, Lee JY. Capacity Reduction Pressure, Financing Constraints, and Enterprise Sustainable Innovation Investment: Evidence from Chinese Manufacturing Companies. Sustainability. 2020; 12(24):10472. https://doi.org/10.3390/su122410472

Chicago/Turabian Style

Chen, Huan; Zhong, Tingyong; Lee, Jeoung Y. 2020. "Capacity Reduction Pressure, Financing Constraints, and Enterprise Sustainable Innovation Investment: Evidence from Chinese Manufacturing Companies" Sustainability 12, no. 24: 10472. https://doi.org/10.3390/su122410472

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