Taylor and Francis Group and Juraj Dobrila University of Pula, Faculty of economics and tourism Dr. Mijo Mirković
Doi
Abstract
This study distinguishes between two dimensions of firm process
innovation, namely, quantity and quality, and uses data from the
World Bank’s China Manufacturing Firm Survey to analyse the differential
impact of Internet applications on the quantity and quality
of process innovation and their mechanisms of action. Internet
applications have a significant facilitating effect on the quantity
and quality of process innovation. However, from the perspective
of the average marginal effect, the facilitating effect of Internet
applications on the quantity of process innovation is greater than
that on the quality of process innovation. Further analysing firm
size, industry, ownership, and regional heterogeneity shows that in
terms of the quantity of process innovation, Internet applications
have a greater impact on small- and medium-sized firms, labourintensive
firms, non-state-owned firms, and eastern firms. As for the
quality of process innovation, Internet applications have a stronger
promoting effect on large firms, technology-intensive firms, and
state-owned firms. The mechanism test reveals that open innovation
and informatisation capability play a mediating role in the
influence of a firm’s Internet applications on process innovation.
This study provides micro-empirical evidence for firms’ Internet
applications to promote process innovation and policy insights into
China’s manufacturing transformation and upgrading
