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| Research on the Relationship between Special Asset Investment, Buyer Monopoly and Upstream Enterprise Innovation Investment |
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Abstract This paper constructed a model based on the case of the bankruptcy of SuZhou Lianjian Company, which had been a upstream supplier of Apple Co. The model concerned on the following three elements in the firm's vertical linkage including specific investment, buyer monopoly and relational capital. The model derived the four deductions as follows: The upstream supplier's innovation investment is reduced with the increase of specific investment for the deal and increased with the enhancement of the bargain power, increased with the decrease of the buyer's market power and increased with the accumulation of the relational capital. The paper used the data collected by the World Bank's investigation on Chinese firms to testify the above deductions empirically. From the coefficient matrix this paper finds that the upstream supplier's innovation intensity is negatively related to the specific investment rate and positively related to the cooperation history and upstream supplier firm's size. The larger the size of upstream supplier firm, the relatively smaller the buyer's market power, the relatively larger the bargain power of the supplier and the upstream supplier's innovation investment will be increased. Both the OLS and robust methods find that the upstream supplier's specific investment significantly reduces its innovation investment; the relational capital represented by the cooperation history has a significant relationship with supplier's innovation investment.
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