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Abstract The main purpose of this study is to characterize and analyze high technology industrial firms. Recommended articles Citing articles 0.
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- Theory of the firm.
- Industrial Concentration.
- Industrial Linkage.
- How Do Zombie Firms Affect Innovation? Evidence from China’s Industrial Firms.
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The Difference Between Economics in Firms & Industry
The main objective of any firm is to maximize profit. Traditionally it was assumed that firm tries to maximize profit in each time period. Industry is a group of related firms. The relationship between the firms may be either based upon product or process criterion, e.
The concept of industry is helpful to government and businessmen to formulate their policies. The activities which are undertaken to produce, convert, extract and fabricate raw materials into finished goods are termed as industries. It is the process where goods are made usable and consumable.
Concentration in the U.S. Economy
Zombie firms are insolvent firms that continue to operate due to continued access to financing at extremely low costs. Nie et al.
The large amount of financing subsidies distributed to insolvent zombie firms causes a great deal of credit misallocation and impedes the availability of financing for normal firms in China. Based on a Chinese patent application database and an above-scale manufacturing firm database, we find that zombie firms significantly reduce the number of patent applications and total productivity factors TFPs of normal firms.
The Difference Between Economics in Firms & Industry | Your Business
For a 1 percent increase in the proportion of zombie firms in the same industry, the total number of patent applications of normal firms decreases by 1 percent, among which the number of invention-type patent applications decreases by 0. The crowding-out effect of zombie firms on innovation is both statistically and economically significant. In terms of the mechanisms, empirical results show that the crowding-out effect is more profound for industries highly dependent on external financing, highly concentrated industries, and non-state-owned normal firms, which are more financially constrained compared to state-owned normal firms.
This implies that the crowding-out effect of zombie firms works by distorting credit allocation and harms fair industry competition.
This paper highlights the importance of solving the problems caused by zombie firms in order to boost firm innovation and help achieve high-quality development in China. The Chinese government regards the dissolution of zombie firms as an important starting point for improving the quality of the supply side of the economy.
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Furthermore, the proportion of zombie firms are the highest among SOE firms about 16 percent for the period of compared to private firms and foreign firms about 7 percent during