Abstract: In the phase of high-quality economic development, market competition has deepened from the product dimension to the technological dimension. The exclusivity, cross-market applicability, and the difficulty in observing technology determine the differences between competition in the technological and product dimensions. Can the technological competition pressure faced by firms become a driving force for their high-quality development? To address this question and reveal the underlying mechanisms, this paper innovatively constructed a firm-level technological competition pressure indicator using the patent text information and empirically tested the impact of technological competition pressure on total factor productivity (TFP) based on the data from A-share listed companies in China between 2010 and 2021. The results showed that technological competition pressure significantly increases TFP, and this finding remains robust after addressing endogeneity concerns and conducting robustness checks. The mechanism tests revealed that technological competition pressure enhances TFP through R&D innovation effects and corporate governance effects. Specifically, it drives firms to increase R&D investment, engage in high-quality innovation, reduce agency costs, and improve investment efficiency, particularly by curbing over-investment. Further analyses indicated that the positive effects are more pronounced in firms with lower institutional ownership and analyst coverage, non-state-owned enterprises, and firms in the mature or declining stages of their lifecycle. Therefore, external technological competition pressure serves as an external governance mechanism that promotes high-quality corporate development. This study will enrich the research on the economic consequences of corporate competition, particularly technological competition, and provide methodological insights for future research on technological competition.

Key words:  technological competition, patent, total factor productivity, text analysis