Policy empowerment and sustained innovation of SOEs: evidence from the “two types of companies” pilot policy in China

Purpose What impact will state-owned capital authorized operation system reform have on the sustained innovation of SOEs? Through what mechanism does it exert its effect? Furthermore, what factors have heterogeneous effects on the relationship between the two? Answering these questions provides an empirical basis for clarifying the role and controversy of state-owned capital authorized operation system reform in improving efficiency. Design/methodology/approach Based on the data of Chinese listed SOEs from 2009 to 2023, this article relies on manually collected “two types of companies” pilot data and employs a multi-period difference-in-differences model to assess the impact of state-owned capital authorized operation system reform on the sustained innovation of SOEs. Findings The results indicate that state-owned capital authorized operation system reform significantly promotes the sustained innovation of SOEs. Mechanism analysis finds that specialized division of labor, agency cost, and external salary gap play a partial mediating role between state-owned capital authorized operation system reform and sustained innovation of SOEs. Moderating effect analysis finds that a good internal governance structure and external market environment can strengthen the positive impact of state-owned capital authorized operation system reform on the sustained innovation of SOEs. Heterogeneity analysis shows that in the central and western regions, local SOEs, and SOEs with a high degree of industry competition, the positive impact of state-owned capital authorized operation system reform on sustained innovation is more significant. Originality/value The conclusions not only help to deepen SCAOS reform but also provide theoretical references for fostering the long-term competitive advantages of SOEs.