| Summary: | Past studies have revealed that ownership structure and financial constraints are significant factors influencing firm innovation. Numerous studies have evaluated the consequences of both factors, particularly on firm innovation performance. However, the literature remains ambiguous about the impact of ownership structure on firm innovation, as most studies focus on a single type of ownership structure. This study aims to holistically explain the interrelationship between five mainstream of ownership structures, financial constraints, and firm innovation, covering the period from 2010 to 2022 and using China’s A-share listed companies as samples. The dataset comprises 4,234 companies, with a total of 27,509 observations. Unlike most prior studies, this research employs Ordinary Least Squares, Fixed Effects, and Two-Stage Least Squares estimation for analysis. The Agency Theory and Resource-Based View (RBV) are utilized to explain the inconsistency between corporate ownership and innovation in reality versus traditional beliefs, providing a new perspective on the nature of ownership structure and its association with financial constraints and firm innovation. The findings generally reveal that ownership structure has a significant impact on firm innovation, but this impact varies depending on the type of ownership structure. State-owned, foreign, institutional ownership, and ownership concentration exhibit positive effects, while director ownership shows a negative effect, consistent with Agency Theory. The results also indicate that all types of ownership structure can alleviate financial constraints, suggesting that ownership structure can bring positive effects on firm innovation. Furthermore, the study confirms the mediating role of financial constraints in the relationship between ownership structure and firm innovation. Consistent with RBV, the findings suggest that appropriate ownership structure can help achieve better resource allocation by mitigating financial constraints, thereby promoting firm innovation. Although director ownership still poses an obstacle to innovation, this negative impact is somewhat mitigated through the alleviation of financial constraints. The validation of these mediating mechanisms further demonstrate the different pathways through which ownership structure exerts its influence. This study enriches the body of knowledge by providing insights into the indirect roles of various ownership structures in enhancing innovation among Chinese listed companies. The findings offer practical implications for regulators and policymakers, empirically indicating that financial constraints should be considered when structuring corporate ownership to improve innovation performance. Finally, this study offers recommendations and directions for future research, such as broadening the scope of ownership structures, incorporating cross-country comparisons to enhance generalizability, and integrating qualitative methods while expanding the sample to include non-listed firms.
|
|---|
