Abstract:  As the primary force of driving development, innovation has always been highly valued by the government and the people. Innovation is a dynamic process, which can not only bring vitality to the enterprise and improve its competitiveness, but also bring risks and uncertainties to its production and operation. Because of the duality of this process,plus the risk preference, opportunism, agency problems and information asymmetry, the innovative resources of the enterprise cannot be fully utilized and thus have a certain impact on its innovation performance.Internal control is the sum of a series of management activities and a dynamic management activity itself which constantly evolves. Recent years have witnessed the breakthroughs that China has achieved in its research on internal control, specifically in the fields of accounting, auditing and corporate strategic management. As a vital internal governance mechanism in modern enterprises, internal control has been generally acknowledged to play an important role in protecting the healthy operation of companies and the stable development of capital market. Internal control can reduce the inefficiency caused by information asymmetry and principal-agent problems in the enterprise′s R&D activities, and improve the level and efficiency of innovation investment.Developing innovation and improving innovation performance have been part of the enterprise′s strategic goals. Internal control is a vital internal governance mechanism for modern enterprises, and is also essential to the realization of their strategic goals.Therefore,issues of allowing internal control to function effectively, increasing the enterprise′s R&D investment and innovation ability, improving its innovation performance and maximizing its value, thus promoting the national economic growth, have been common concerns among scholars. Innovation is part of the enterprise′s strategic goals, and internal control is essential to the realization of those goals and closely related to the enterprise′s innovation performance. The current research has rarely covered such topics as how the quality of internal control impacts the enterprise′s innovation performance and the extent of this impact.Hence, we propose the following three hypotheses: H1: By controlling other factors, internal control has a positive effect on the enterprise′s innovation performance; H2: By controlling other factors, the innovation performances of non-state-owned enterprises are better than those of state-owned enterprises; and H3: Internal control plays a more important role in promoting the innovation performances of non-state-owned enterprises than those of state-owned enterprises. Based on the sample data of listed companies on the A-share Main Board of Shanghai and Shenzhen Stock Exchanges from 2012 to 2016, this paper conducts an empirical study on whether the quality of the enterprise′s internal control has a significant impact on its innovation performance, and further analyzes whether internal control quality of enterprises of different property rights has different amount of influence on the enterprise′s innovation performance, and analyzes the reasons for those differences based on the theory of modern property rights. We choose R&D investment as the dependent variable to measure the enterprise′s innovation performance, internal control index issued by Shenzhen DiBo Risk Management Limited Company as the independent variable, virtual variable 1,0 as state-owned enterprises and non-state-owned enterprises respectively, and asset return rate (ROA), firm age (FIRMAGE), shareholder ownership ratio (SHAREHOLD), enterprise size (SIZE), executive compensation (SALARY) as control variables. We make regression analysis respectively between internal control and innovation performance, property right nature and innovation performance. Besides, we use property right nature as adjustment variable to explore whether property right nature has an impact on internal control and performance. Referring to other scholars′ research, we make descriptive statistics for both total sample variables and group samples of state-owned enterprises and non-state-owned enterprises. We find that the quality of internal control has a significantly positive impact on the enterprise′s innovation performance; the innovation performances of non-state-owned enterprises are better than those of state-owned enterprises; furthermore, the nature of property rights, as an adjustment variable, affects the role of internal control in promoting the enterprise′s innovation performance. Compared with state-owned enterprises,the quality of internal control of non-state-owned enterprises promotes innovation performance more significantly.In order to prove the accuracy of the conclusions, we classify all the samples based on their industries, and select manufacturing industry, the most representative sample, to explore the relationship between internal control and the enterprise′s innovation performance and the role of property rights in adjusting the two, and we draw the same conclusions.As the nation′s leaders of innovation driving development, manufacturing enterprises should increase their investment in innovation, enhance their independent innovation capabilities,make full use of the preferential policies introduced by the government, and increase the level of internal control. From the perspective of internal control, this paper provides solutions for different ownership enterprises to efficient R&D investment, overall improvement of China′s innovation capabilities and the enterprise′s innovation performance.According to empirical analysis and research conclusions, we give the following suggestions: (1) Improve the internal control mechanism and allow internal control to play its part in the enterprise′s innovation performance as well as its survival and development. (2) Expand the scope of compulsory implementation of internal control, especially in non-state-owned enterprises so as to improve their innovation performances. (3) Promote the reform of state-owned enterprises, reduce agency costs and owner vacancy, and improve the property rights system of modern enterprises, so that state-owned enterprises and non-state-owned enterprises can develop together.This research enriches the studies on the economic consequences of internal control and the factors affecting innovation performance, and makes up the deficiency of research about the impact of internal control on innovationperformance.At the same time, it provides decision-making basis for enterprises of different property rights to implement and promote internal control comprehensively, and decision-making references for them to explore innovation performance from the perspective of internal control. The results of this research have important theoretical significance and practical guidance value.

Key words:  innovation, innovation performance, internal control, nature of property rights, strategic goals