On July 5th we held a CIMR Debate to discuss social trust and firms’ innovation in Chinese provinces.
The debate was chaired by Dr Grace Bo Peng, (Birkbeck, University of London) with expert practitioners and academics in the field, including Dr Luca Andriani, Department of Management, Birkbeck, University of London and Professor Alice Chunyan Zhou, Co-founder/CEO of the Triple Helix Institute.
The full recording of the workshop is available here.
Luca Andriani – Social Trust & Firms’ Innovation
Luca Andriani opened the session by presenting his research paper about the role of social trust and its impact on firms’ innovation in Chinese provinces.
Luca explained the concept of social trust and why it is important. Social trust indicates the individual’s perception that her fellow citizens are generally trustworthy and willing to keep promises and agreements. This has important implications in the working and industry environment as it enhances trusting and more effective collaborations, ideal for boosting innovation. Social trust, in fact, reduces transaction costs, fosters cooperation, and promotes high-risk innovation investments. The paper, hence, aimed at exploring the relationship between social trust and the number of patents applications as well as granted to firms. The research idea was supported by the increasing interest in studying the linkages between institutions and cultural aspects in different economic contexts.
Luca continued the session explaining the motivations of choosing the context of China. China is an interesting case study for this research due to its transition from an export-oriented economy to one driven by innovation. China’s economic development agenda focuses on innovation. The country’s vast territory and regional disparities offer valuable insights into the role of informal institutions like social trust. Hence, addressing the analysis at a regional level is crucial to understanding innovation patterns. The study uses data from different official sources including the Chinese General Social Survey for social trust, the China Stock Market and Research Database, for data regarding firms financial aspects including patents applications and granted, the China Statistical Yearbook, for macroeconomic variables, and the Market Index Database for data on regional institutional quality. The analysis covers the period from 2012 to 2017, using standard innovation models.
The key findings of the research indicate that provinces with higher levels of social trust have more patents (both applications and granted patents). The results are consistent across various sensitivity analyses, supporting the impact of social trust on firms’ innovation. The research also explores modular extensions, considering financial constraints, quality of formal institutions, and different types of firms (state-owned, non-state-owned, high-tech, and non-high-tech). Interestingly, the study finds that social trust has a more significant impact on firms with financial constraints, lower quality formal institutions, non-state-owned firms, and high-tech firms.
The findings have implications for investors and policymakers, helping them identify regions with higher social capital for innovative investments and consider policies to promote cooperative behavior and strengthen trust-based relationships among agents involved in innovation.
Alice Chunyan Zhou – Social Trust concept in China & Innovation Study
Alice Chunyan Zhou continued the discussion by recognizing both the complexity and the importance of analyzing the intertwin between social trust and firm innovation, especially in a vast and diverse country like China. She pointed out that the concept of social trust in China is not straightforward, given the ups and downs in societal trust, even among acquaintances and family members. She emphasized the importance of better disentangling the concept of social trust, given its complexity, reflecting on the fact that this empirical evidence can stimulate further in-depth qualitative research. The idea of further qualitative studies relies upon the importance of narrowing the ground of the knowledge in the identification of insightful case studies.
In summary, Alice Chunyan Zhou found the research topic interesting and encouraged further exploration of the relationship between social trust and firm innovation in China.
Grazia Ietto-Gillies, Klaus Nielsen – Final thoughts on the topic
The debate continued with various points and questions raised by other participants during the discussion.
Grazia Ietto-Gillies asked about controlling for demographic and regional factors in the study, to which Luca responded positively, mentioning that they included various control variables in their analysis including among the others Foreign Direct Investments.
Klaus Nielsen provided insightful comments about the concept of social trust and how it might differ between older and younger generations in China. He emphasized the importance of understanding the different forms of social capital, such as bonding and bridging social capital, and their implications for innovation.
Alice Chunyan Zhou explained the triple helix concept and how social trust fits in the context of innovation and sustainability. She suggested that policymakers should consider the relative importance of social trust compared to other factors for fostering business innovation.
Overall, the discussion highlighted the relevance of social trust in promoting business innovation in China and the need to consider various factors and perspectives in understanding its impact.
We would like to thank again our great panel of speakers and chair for their valuable contribution to this event and to our attendees for being so engaged during the session.
Don’t miss out on our upcoming CIMR Debates sessions during the Autumn Term!
