More entrepreneur innovation and less labor conflicts – empirical evidence from China employer–employee survey

Labor conflict has become a serious problem in recent China. From the perspective of entrepreneur innovation, this paper aims to find an effective path to eliminate this conflict. On the basis of theoretical analyses and regression analyses, this paper finds that, with legal environment and other conditions identical, entrepreneur innovation will significantly facilitate elimination of labor conflicts.

Using theoretical analyses based on entrepreneurship theory, this paper puts forward a series of hypotheses about the effects of entrepreneur innovation on labor conflicts. With panel data during 2013-2015 from China Employer–Employee Survey, this paper examines the effects of entrepreneur innovation on labor conflicts. Using interaction term regressions, this paper examines heterogeneous effects of entrepreneur innovation on labor conflicts by ownership, market power and export behavior. With mediating effect model, this paper examine whether workers’ participation in corporation governance is an important channel in which entrepreneurial innovation can impact on labor conflicts.

First, using benchmark regressions and robustness checks, this paper finds that there exist significantly positive effects of entrepreneur innovation on workers’ job satisfaction, incentive, social security, job development and job stability, which will reduce potential risks of labor conflict effectively. Second, using interaction term regressions, this paper finds that there exist heterogeneous effects of entrepreneur innovation on labor conflicts by ownership, market power and export behaviors. The study finds that the effects of entrepreneur innovation are more concentrated in private firms, firms with stronger market power and non-exporters. Third, using a mediating effect model, the study finds that workers’ participation in corporation governance is an important channel in which entrepreneur innovation can have impacts on labor conflicts.

The paper enriches the existing research about how to eliminate labor conflicts in China. On the basis of China Employer–Employee Survey data, this paper finds the importance of entrepreneur innovation on Chinese transition, which not only has positive impacts on firm performance, but also has impacts on eliminating labor conflicts and establishing better labor relationship. Therefore, stimulating entrepreneur innovation is very important for solving conflicts during Chinese transition.