Government subsidization and corporate product strategies: evidence from Chinese exporters
This study aims to take advantage of exporters’ product codes and examine the effects of government subsidization on corporate product strategies by focusing on the dimension of product differentiation. This study uses harmonized system (HS) product codes to construct a novel measure of product d...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Emerald Publishing
2023-09-01
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| Series: | China Accounting and Finance Review |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/CAFR-06-2022-0068/full/html |
| _version_ | 1797682388618182656 |
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| author | Xiaodong Lu Jingjun Liu Janus Jian Zhang |
| author_facet | Xiaodong Lu Jingjun Liu Janus Jian Zhang |
| author_sort | Xiaodong Lu |
| collection | DOAJ |
| description | This study aims to take advantage of exporters’ product codes and examine the effects of government subsidization on corporate product strategies by focusing on the dimension of product differentiation.
This study uses harmonized system (HS) product codes to construct a novel measure of product differentiation among a sample of Chinese exporters during 2000–2012. It uses propensity score matching to construct a comparable sample of control firms for exporters receiving government subsidies, and then a difference-in-differences (DID) analysis is conducted.
This study finds that product differentiation decreases immediately upon receiving a government subsidy. This finding suggests that in an emerging market, firms use their subsidy to imitate competitors rather than increase innovation. Further analyses show that this effect is concentrated among wholly foreign-owned enterprises and firms that focus on general trade rather than processing trade. In addition, the authors find some evidence that government subsidization leads to an increase in the number of product lines and decreases in domestic value added and export product quality.
This study constructs a novel measure of product differentiation for a large sample of Chinese exporters and provides insights that government subsidization can affect corporate product strategies. |
| first_indexed | 2024-03-11T23:59:01Z |
| format | Article |
| id | doaj.art-4386cf0e5633412191a17dd9dcb602fd |
| institution | Directory Open Access Journal |
| issn | 2307-3055 |
| language | English |
| last_indexed | 2024-03-11T23:59:01Z |
| publishDate | 2023-09-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | China Accounting and Finance Review |
| spelling | doaj.art-4386cf0e5633412191a17dd9dcb602fd2023-09-18T06:24:48ZengEmerald PublishingChina Accounting and Finance Review2307-30552023-09-0125329331210.1108/CAFR-06-2022-0068Government subsidization and corporate product strategies: evidence from Chinese exportersXiaodong Lu0Jingjun Liu1Janus Jian Zhang2https://orcid.org/0000-0002-9988-8075Sun Yat-Sen UniversitySun Yat-Sen UniversityHong Kong Baptist UniversityThis study aims to take advantage of exporters’ product codes and examine the effects of government subsidization on corporate product strategies by focusing on the dimension of product differentiation. This study uses harmonized system (HS) product codes to construct a novel measure of product differentiation among a sample of Chinese exporters during 2000–2012. It uses propensity score matching to construct a comparable sample of control firms for exporters receiving government subsidies, and then a difference-in-differences (DID) analysis is conducted. This study finds that product differentiation decreases immediately upon receiving a government subsidy. This finding suggests that in an emerging market, firms use their subsidy to imitate competitors rather than increase innovation. Further analyses show that this effect is concentrated among wholly foreign-owned enterprises and firms that focus on general trade rather than processing trade. In addition, the authors find some evidence that government subsidization leads to an increase in the number of product lines and decreases in domestic value added and export product quality. This study constructs a novel measure of product differentiation for a large sample of Chinese exporters and provides insights that government subsidization can affect corporate product strategies.https://www.emerald.com/insight/content/doi/10.1108/CAFR-06-2022-0068/full/htmlgovernment subsidyproduct differentiationproduct strategyproduct market competition |
| spellingShingle | Xiaodong Lu Jingjun Liu Janus Jian Zhang Government subsidization and corporate product strategies: evidence from Chinese exporters China Accounting and Finance Review government subsidy product differentiation product strategy product market competition |
| title | Government subsidization and corporate product strategies: evidence from Chinese exporters |
| title_full | Government subsidization and corporate product strategies: evidence from Chinese exporters |
| title_fullStr | Government subsidization and corporate product strategies: evidence from Chinese exporters |
| title_full_unstemmed | Government subsidization and corporate product strategies: evidence from Chinese exporters |
| title_short | Government subsidization and corporate product strategies: evidence from Chinese exporters |
| title_sort | government subsidization and corporate product strategies evidence from chinese exporters |
| topic | government subsidy product differentiation product strategy product market competition |
| url | https://www.emerald.com/insight/content/doi/10.1108/CAFR-06-2022-0068/full/html |
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