Abstract:

Since China government proposed the Supply-side Structural Reform in 2015, the contradiction about overcapacity has become one of the key contradictions hindering the development of current economy. The problems of low efficiency of economy, waste of all kinds of resources, and increased risks caused by overcapacity have seriously disrupted the normal operation of the national economy. It also brings severe challenges to the sustainable and healthy development of enterprises in China. Innovation, as the key point to the Supply-side Structural Reform, is one of the important way to resolve overcapacity, and it is also an important driving factor to make sure the sustainable and stable development of enterprises in China. The enterprise innovation determines the development direction, scale, and speed of the enterprise，and it is the cornerstone of the development of the enterprise, a necessary condition for the enterprise to seek for vitality and retain its survive, and an important element for market economy to keep its active. Therefore, solving the problem of overcapacity and realizing enterprise innovation are of great significance to the transition of China′s economy from a stage of high-speed growth to the stage of a high-quality development. How to improve the capacity utilization and how to improve the innovation ability of the enterprise are important issues that needs to be talked and solved to further stimulate the vitality of the market participant and improve the quality of the development of national economy. On this basis, we think about the different reaction mechanisms of the enterprise in the face of overcapacity. Some enterprises have to choose failure, some choose the enterprise transformation, or some choose to suppress the bad impact of overcapacity by improving the innovation capacity of the enterprise. In sum, we regard overcapacity in the enterprise as a short-term stimulus, and explore the impact of overcapacity on the enterprise innovation, including the causes, mechanisms, effects, and results.
Under the guidance of this research purpose, we review literatures about the causes of overcapacity, the measurement of overcapacity, and the relationship between overcapacity and the enterprise innovation. We learn experience from previous literatures, then explore the impact of overcapacity on the enterprise innovation. On the basis of the impact mechanism, we put forward the possibility of overcapacity as an internal stimulus in the enterprise, which in turn forces the enterprise to improve innovation ability. When a certain degree of overcapacity occurs in an enterprise, the enterprise has to take innovation into account in order to alleviate the pressure on survival, promote the enterprise development, and break through the current development dilemma. Next, we explore the role of idle costs, as a mediating variable, in the impact of overcapacity on the enterprise innovation, which means that overcapacity causes idle costs, and idle costs affect the enterprise innovation. Further, we focus on the moderating effect of the proportion of state-owned shares, and explore the obvious advantages of endowment and political resources from the proportion of state-owned shares, which cause that the impact of overcapacity on the enterprise innovation changes with the proportion of state-owned shares. On this basis, we propose different hypotheses for the main effect, the mediating effect, and the moderating effect according to different research contents.
In order to test these hypotheses, we focus on the industries with overcapacity that mentioned in all kinds of researches, news reports, and official announcements. Based on the data from the annual report of listed companies in mentioned industries from 2014 to 2015, we firstly select the current period of the increase of accumulated depreciation of fixed assets, total cash outflows, and the number of employees as the input indicators of enterprises, and select the current period of operating incomes as the output indicator at the micro level, using the method of Data Envelopment Analysis (DEA) to measure the annual capacity utilization of all sample enterprises through the model of Variable Return to Scale (VRS). Then, we take the capacity utilization of the enterprise as the explanatory variable, the current number of patent applications of the enterprise representing the level of the enterprise innovation as the explained variable, the research and development investment and the asset of the enterprise as important control variables, the idle cost as the mediating variable, and the proportion of state-owned shares as the moderating variable to set up econometric models. The Ordinary Least Squares (OLS) is used to test whether overcapacity could be an effective stimulus to motivate the enterprise to innovate. At the same time, the mediating effect of idle costs and the moderating effect of state-owned shares were tested.
Based on the empirical test results, we can conclude that the overcapacity of the enterprise can effectively stimulate the development of the enterprise innovation to a certain extent. The overcapacity of the enterprise can be used as a stimulus for the internal development of the enterprise and induce the enterprise to carry out innovative activities. In addition, the overcapacity of the enterprise does not directly and totally affect the enterprise innovation, and its incentive for the enterprise innovation is partly achieved through the idle cost as the mediating variable. In other words, excessive overcapacity results in a large number of idle costs. On the basis of overcapacity and idle costs, the enterprise has to consider innovation in order to develop healthily and stably, and breaks through the current development dilemma by improving the enterprise innovation ability. Obviously, the idle cost plays a mediate role in the relationship between overcapacity and the enterprise innovation. Further, the proportion of state-owned shares, as an important moderator, has played an important role in stimulating innovation, which means that the higher the proportion of state-owned shares in the enterprise, the more capital and political resources the enterprise has, so the enterprise has sufficient power to support innovation activities. According to above conclusions, we put forward corresponding suggestions of development and innovation in terms of the current relationship between overcapacity and the enterprise innovation in China, the reduction of state-owned shares, and the policy arrangements on overcapacity and the enterprise innovation implemented by government.

Key words: enterprise innovation, overcapacity, idle costs, proportion of state-owned shares