To read this content please select one of the options below:

Corporate innovation and innovation efficiency: does religion matter?

Dan Huang (School of Accounting, Southwestern University of Finance and Economics, Chengdu, China)
Dong Lu (School of Accounting, Southwestern University of Finance and Economics, Chengdu, China)
Jin-hui Luo (School of Management, Xiamen University, Xiamen, China)

Nankai Business Review International

ISSN: 2040-8749

Article publication date: 6 June 2016

1059

Abstract

Purpose

The purpose of this paper is to examine whether and how the extent of religion in a firm’s social environment affects corporate innovation and innovation efficiency from the perspectives of religion-related risk aversion and religion-based social norms.

Design/methodology/approach

Using a sample of 8,601 Chinese firm-year observations from 2007 to 2012, this paper examines the relationship between religion and innovation intensity, as well as innovation efficiency. A battery of checks, that is, adopting Heckman selection model, using a province-level measure of religiosity and an alternative measure of innovation intensity, and taking the stochastic frontier analysis method to capture corporate innovation efficiency, are conducted to alleviate the concern of self-selection and to guarantee the robustness of the findings of this paper.

Findings

This paper finds strong evidence that firms registered in more religious regions, that is, regions with more Buddhist monasteries within a certain radius, undertake fewer innovation activities as measured by the ratio of R&D investment over total sales income but achieve higher innovation efficiency reflected by the value-relevance of R&D investment.

Originality/value

This paper complements the existing literature by suggesting that religion can serve as an informal social mechanism and performs a “less is more” effect in disciplining corporate innovation activities.

Keywords

Acknowledgements

The authors acknowledge financial support from the Chinese National Science Funds (Grant Numbers 71273212, 71202061 and 71572160), Fundamental Research Funds for the Central Universities (Grant Number JBK1507005) and the Foundation for the Author of National Excellent Doctoral Dissertation of the People’s Republic of China (Grant Number 201493). The authors also express special thanks to Prof Xingqiang Du for his meaningful suggestions and comments. All remaining errors are that of the authors.

Citation

Huang, D., Lu, D. and Luo, J.-h. (2016), "Corporate innovation and innovation efficiency: does religion matter?", Nankai Business Review International, Vol. 7 No. 2, pp. 150-191. https://doi.org/10.1108/NBRI-10-2015-0024

Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

Related articles