The Impact of Market Competition on Process Innovation in Chinese High-Tech Companies: The Moderating Effect of Executive Incentive

With the growing fierce global high-end manufacturing competition, China's high-tech manufacturing enterprises are facing stronger challenges and have to resort to process innovations in order to sustain competitiveness. The innovation strategy often affected by the external environment, such as market competition. And the innovation willingness and strategic decisions of executives may play a significant role in it. This paper takes 1398 high-tech manufacturing companies listed between 2013 to 2018 in Shanghai and Shenzhen as research sample, grouped as the total sample, the sample of state-owned enterprises (SOE), and the sample of non-state-owned enterprises (non-SOE) with correlation analysis and negative binomial regression analysis by STATA. Through research on the total sample of enterprises, it is found that market competition has a positive effect on process innovations and executive compensation incentives have a negative moderating role in the relationship between market competition and process innovations, but the moderating role of executive equity incentives is not significant. Further research finds that the ownership has a positive moderating effect on the relationship between market competition and process innovations, and also affects the moderating role of executive equity incentives. In addition, executive equity incentives have a positive moderating effect on market competition and process innovation in Chinese SOEs, while executive equity incentives have a negative moderating effect on market competition and process innovation in Chinese non-SOEs. This study enriches the research on the mechanism of market competition on process innovation in enterprises and has guiding significance for enterprises to adopt executive incentive policies to help improve process innovations in China.