Does Chinese mixed-ownership reform improve innovation quality in privately-owned enterprises? A dual-perspective evidence from managerial myopia and resource-based view

Abstract

Existing literature has largely overlooked the mediating role of managerial myopia in shaping corporate innovation quality, and the impact of external resource provision on incentivizing innovation under the Resource-Based View (RBV) remains contentious. This study investigates whether China’s reverse mixed-ownership reform improves innovation quality in privately-owned enterprises (POEs) from the perspectives of managerial myopia and the RBV. Using data from 1,413 publicly listed POEs between 2007 and 2022 and applying textual analysis to measure managerial myopia, the study finds that managerial myopia negatively affects innovation quality. Moreover, the reverse mixed-ownership reform fails to alleviate managerial myopia, thereby hindering corporate innovation quality. External resource provisions, such as government subsidies and tax incentives, significantly moderate the detrimental effects of managerial myopia on innovation quality, and higher credit financing costs exacerbate this relationship, as demonstrated after addressing sample self-selection bias. The empirical findings extend the scope of current research by bridging the literature on behavioral finance and the RBV, offering new insights into the interplay between managerial myopia, external resource provisions, and innovation quality. Rigorous robustness checks, including sensitivity analyses and addressing endogeneity concerns, validate these conclusions.