EMPIRICAL STUDY ON THE IMPACT OF EQUITY STRUCTURE ON ENTERPRISE INNOVATION ABILITY：BASED ON COMPANIES LISTED ON CHINA'S GROWTH ENTERPRISE MARKET

Abstract

This study investigates the relationship between ownership structure, market competition, and technological innovation ability for companies listed on China’s Growth Enterprise Market (GEM). Panel data of 181 GEM-listed firms from 2010-2019 was analyzed using regression modeling. The results reveal an inverted U-shaped relationship between ownership concentration and innovation ability. Initially, concentrated ownership promotes innovation as the interests of large and small shareholders converge. However, beyond a threshold level, further concentration impedes innovation likely due to entrenched major shareholders pursuing private benefits. Moreover, intense market competition positively moderates this relationship by enhancing the benefits and deterring the downsides of concentrated ownership of corporate innovation activities. The findings provide vital insights into how equitable control balances alongside competitive forces can enable higher innovation efficiency, especially for rapidly growing Chinese enterprises. This study advances the understanding of antecedents of innovation capability for firms in emerging economies.

Keywords Listed companies on GEM, equity structure, innovation ability，market competition