Why Does Institutional Opening-up Promote the Enhancement of Innovation Capabilities in Chinese Enterprises?

Abstract

China’s involvement in global economic governance has been a progressive and step-by-step ascent. While the domestic and international environment has undergone major changes, the process of economic globalization has taken on new trends, and China has entered a new stage of high-level opening up. This paper’s theoretical analysis suggests that high-level opening up helps enhance the quality of foreign capital utilization, thereby addressing the challenges associated with the lower technological benefits of previous foreign capital utilization and further facilitating the enhancement of innovation capabilities in Chinese enterprises. Guided by this theoretical framework, this study has measured the level of opening up in Chinese provinces from 2013 to 2022 using web crawling technology. Econometric tests conducted with Chinese enterprise panel data reveal that: firstly, First, it effectively promotes the improvement of the total innovation output of enterprises and significantly improves breakthrough innovation capabilities. This result still holds true under a series of robustness and endogeneity tests; secondly, it mainly improves local advantages and high-quality international The attraction of foreign capital and multinational companies enables local companies to achieve breakthroughs and catch-up in core technologies by learning and competing with advanced foreign companies, thereby enhancing their technological innovation capabilities; thirdly, for companies in different industries and different ownership attributes The impact of improving innovation capabilities may vary. This study helps promote a new paradigm of innovation-driven development in the context of high-level opening-up.