Impact of State Equity Participation on Family Enterprises' Innovation Input

Whether the mixed-ownership reform whereby the state invests in nonstate enterprises will be effective is a question that has attracted widespread attention and discussion. This paper uses sample data from family-owned enterprises listed from 2009 to 2016 and empirically tests the impact of equity participation by the state in the family enterprises on their innovation input and the underlying mechanisms. Our results show that state investment has positive impacts on innovation input in the family enterprises. This effect is even more significant for high-tech family enterprises and/or those family enterprises confronting high policy uncertainty. Our results also reveal that when state investment is accompanied by a greater degree of state participation in enterprise operations or when the investment originates locally, there is a greater increase in innovation input. Further analysis of the underlying mechanisms reveals that state investment increases innovation input by increasing both willingness to innovate and the resources available for innovation. This paper provides new theoretical support and empirical evidence for pushing the mixed-ownership reform and stepping up the sustainable development of non-state enterprises including family ones.