Jeong-han Kang, Sonja Opper, Victor Nee
A Theory of Innovation: Market Transition, Property Rights, and Innovative Activity
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- 10.1628/093245610793102152
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The aim of this paper is to specify a theory to explain why transitions to a market economy cause a shift to a higher level of innovation. Marketization increases the power of economic actors relative to political actors, increases inter-firm competition, creates new opportunities for entrepreneurship, and subsequently motivates innovative activity. For our empirical application, we focus on China's transition economy, which offers a broad range of institutional environments to examine the relation between market transition and increasing innovative activity by entrepreneurs and firms.