The impact of the recognition of high-tech enterprise on R&D disclosure

This study is one of the first attempts to empirically explore how high-tech recognition from the government affects high-tech enterprise R&D disclosure. Our findings provide empirical evidence that companies disclosed more R&D information after being recognized as high-tech enterprises and reveal that, compared to authentic high-tech enterprises, pseudo-high-tech enterprises disclosed less detailed and vaguer R&D information.

Theoretical implications

This study makes several significant theoretical contributions to the fields of stakeholder theory, institutional theory, and corporate disclosure behavior.

The findings enrich the literature on institutional theory, particularly in its application to industrial policies and firm innovations. Institutional theory, specifically through coercive, normative, and mimetic pressures (DiMaggio & Powell, 1983), offers a comprehensive lens to understand corporate R&D disclosure. Coercive pressures, such as regulatory mandates tied to high-tech certification, compel firms to meet disclosure standards to qualify for tax incentives and gain legitimacy. Our findings show that authentic high-tech firms respond to these pressures by providing detailed R&D disclosures, signaling their commitment to innovation and strengthening their credibility as industry leaders. In contrast, pseudo-high-tech firms—those lacking genuine R&D capabilities—meet only minimum disclosure requirements, using vague information to secure benefits while masking their limited innovation, thus reflecting a superficial compliance with regulatory demands.

Drawing on stakeholder theory, our findings indicate that authentic high-tech firms enhance transparency to meet stakeholder expectations, reinforcing trust and engagement (Freeman et al. 2010). Pseudo-high-tech firms, however, obscure information, strategically managing disclosures to avoid scrutiny. These results refine institutional theory by demonstrating how coercive pressures from government recognition drive divergent disclosure behaviors. Authentic firms align with institutional norms to gain legitimacy (DiMaggio & Powell, 1983), while pseudo-firms mimic compliance, highlighting the dual impact of recognition policies. Furthermore, consistent with information asymmetry theory, authentic firms reduce asymmetry to attract investment, whereas pseudo-firms exploit asymmetry to conceal limited innovation capabilities (Stiglitz & Weiss, 1981).

Normative pressures, driven by industry expectations (DiMaggio & Powell, 1983), further influence these firms’ disclosure behaviors. Authentic firms align with these norms by providing comprehensive R&D information to build trust with stakeholders, particularly when information demand is high. This commitment to transparency helps reinforce their standing within the high-tech ecosystem. Pseudo-high-tech firms, however, only meet stakeholder expectations superficially, presenting selective disclosures that project compliance without fully addressing information needs, highlighting their limited R&D resources.

At last, mimetic pressures encourage high-tech firms to emulate the disclosure practices of their peers. Authentic firms, influenced by these pressures, often exceed industry standards, positioning themselves as leaders in transparency. Pseudo-high-tech firms attempt to mimic authentic firms’ disclosures to appear legitimate, but they typically fall short in quality and depth, selectively withholding information that could reveal their lack of innovation.

The interplay of coercive, normative, and mimetic pressures creates a complex environment where high-tech recognition drives divergent disclosure behaviors. Authentic high-tech firms fully embrace transparency to bolster their legitimacy, while pseudo-high-tech firms engage in strategic, surface-level disclosures to meet minimum standards without revealing their resource limitations. This nuanced understanding of institutional pressures enriches institutional theory by demonstrating how certification-driven disclosure practices vary according to firms’ capabilities and motivations.

By incorporating the R&D information disclosure behavior of Chinese high-tech companies, our study adds a new dimension to the existing literature. It provides a nuanced understanding of how institutional factors, such as various policies and regulations, shape corporate behavior, especially in innovation and technology. Li and Zheng’s (2016) work underscores the importance of evaluating industrial policy through the lens of industry performance, suggesting that such an approach can foster innovation, optimize the mix of industries, and drive economic growth. In addition, Cocis et al. (2021) showed that economic growth, proxied by the GDP growth rate, was substantially influenced by economic indicators such as imports, exports, and gross capital formation and was mainly triggered by predictors such as interest rates, business angels, bank support, and public support.

Building on this foundation, this study expands the perspective by demonstrating how R&D disclosure practices, shaped by institutional frameworks, can serve as both a catalyst and a barometer for innovation in the high-tech sector. The exploration of R&D disclosure dynamics underscores the critical role of transparency and information flow in fostering an environment conducive to innovation. Information asymmetry theory (Akerlof, 1970; Stiglitz & Weiss, 1981) further enriches our understanding of these motivations by highlighting the imbalance in information between a company and its external stakeholders, such as investors or customers. While these stakeholders possess less knowledge about the company’s inner workings, risks, or prospects, high-tech firms face a dual challenge: reducing information asymmetry to lower investor uncertainty while safeguarding proprietary knowledge to maintain a competitive edge.

High-tech recognition encourages firms to be more transparent, aligning with institutional theory (Scott, 2005), which posits that organizational practices are influenced by regulatory, cognitive, and normative pressures. However, our findings reveal that pseudo-high-tech firms strategically diverge from normative expectations. These firms disclose less readable R&D information, aligning with information asymmetry theory as they attempt to conceal their lack of substantive R&D activities while superficially complying with coercive pressures. Stakeholder theory explains this behavior as a misalignment with stakeholder demands, where pseudo-high-tech firms prioritize short-term gains over long-term trust and transparency.

In contrast, authentic high-tech firms leverage recognition to disclose more comprehensive R&D information, enhancing their innovative capacity and contributing to the broader innovation ecosystem within the industry. This duality illustrates how institutional pressures interact with information asymmetry, shaping diverse organizational responses. Ultimately, our study enriches the understanding of how transparency in R&D disclosures can promote innovation while also exposing the potential for strategic obfuscation.

This study’s exploration of government as a critical stakeholder also extends stakeholder theory (Freeman et al. 2010), particularly regarding corporate disclosure behavior. Stakeholder theory emphasizes that different stakeholder groups—such as investors, customers, regulatory bodies, competitors, and the government—have distinct and often conflicting demands for R&D information disclosure, creating a complex environment for high-tech firms. Investors demand detailed and transparent R&D disclosures to assess a firm’s innovation capabilities and growth potential, which helps them make informed financial decisions. Transparent disclosures can build investor trust, reduce information asymmetry, and enhance the firm’s valuation (Shahid, 2024). Customers are also interested in R&D disclosures, viewing them as indicators of the firm’s commitment to quality, technological advancement, and innovation, which influences their purchasing decisions and brand loyalty.

The government plays a dual role as both a regulatory authority and a critical stakeholder. On one hand, the government requires transparency to ensure that high-tech firms comply with the terms of certification, especially when such certification provides tax incentives and other financial benefits. High-tech recognition mandates a certain level of R&D disclosure to justify these incentives, pushing firms to report on their innovation activities as a measure of accountability. On the other hand, as a stakeholder, the government seeks to promote genuine innovation and technological progress within the industry. This pressure influences recognized firms to disclose authentic R&D information to demonstrate their alignment with national policy objectives, supporting broader economic growth and industrial development.

However, competitors present a conflicting set of interests; they may perceive disclosed R&D information as an opportunity to gain strategic insights, potentially weakening the disclosing firm’s competitive edge. High-quality disclosures can inadvertently reveal proprietary knowledge or strategic priorities, which competitors could exploit. This creates a balancing act for firms, who must satisfy the government’s regulatory demands and investor expectations for transparency while protecting sensitive information from competitors.

To navigate these diverse and sometimes conflicting interests, high-tech firms often adopt selective disclosure practices. Authentic high-tech firms are likely to disclose detailed R&D information to satisfy investor, customer, and government demands, using transparency to signal innovation capacity and legitimacy. By demonstrating compliance with government standards, these firms benefit from the credibility associated with certification and government support. However, they carefully withhold proprietary details to protect their competitive position. Pseudo-high-tech firms—those that lack substantial R&D resources but seek certification benefits—respond differently, often meeting only the minimum disclosure requirements to maintain certification. These firms provide vague or superficial information to appear compliant while protecting themselves from deeper scrutiny by both the government and investors.

This strategic approach enables authentic high-tech firms to satisfy various stakeholder expectations, addressing demands for transparency from the government, investors, customers, and regulatory bodies, without revealing information that could be exploited by competitors. Pseudo-high-tech firms, meanwhile, navigate these demands superficially, offering minimal disclosures that project compliance without fully addressing the information needs of the government and other stakeholders. By analyzing these diverse stakeholder demands and firms’ varied responses, this study extends stakeholder theory by illustrating how high-tech firms manage competing interests among stakeholder groups. The government’s role as a critical stakeholder further highlights how R&D transparency can serve both public policy objectives and firm-specific strategic goals, particularly within a high-certification context.

Prior research (e.g., Yang et al. 2017; Sun, 2018; Wan & Xu, 2019; Yang & Rui, 2020) primarily focused on the influence of policy on tangible aspects of enterprises’ R&D, such as investment levels and patent output. We shift the focus by examining the impact of high-tech enterprise recognition on R&D disclosure, a critical but often overlooked aspect in discussions of traditional stakeholder theory (e.g., Sun, 2018; Wan & Xu, 2019; Yang & Rui, 2020; Yang et al. 2017). The current study also provides a more holistic view of the role of stakeholders, particularly the government, in shaping corporate disclosure practices, and underscores that stakeholders did not just influence the actual outcomes of R&D activities but also had a profound impact on how these activities are represented before stakeholders and the public. This nuanced approach to stakeholder theory acknowledges that the government, as a stakeholder, plays a dual role: first, as a regulator that sets the parameters for corporate achievement and disclosure, and second, as an influence on strategic decisions of enterprises regarding their R&D activities. This dual role is particularly evident in high-tech sectors, where technological advancements and innovations are closely tied to regulatory frameworks and government policies.

Lastly, in this study, we built a scenario to estimate the multiple motives of voluntary disclosure. Relevant literature (e.g., Amore, 2020; Huang et al. 2020; Kultti et al. 2007; Wang, 2007) argues that enterprises voluntarily disclose more information if the information demand increases, while they disclose less when information disclosure costs increase. Strategic disclosure may also exist because of management self-interest (e.g., Glaeser et al. 2020; Huang et al. 2014; Lo et al. 2017; Wang & Wang, 2018; Wang et al. 2018; Xu et al. 2021). By studying the relationship between an enterprise’s innovation and management performance reports, Huang et al. (2021) provided a scenario where both information demand and information disclosure costs are high. In our research, while the context of high-tech enterprise recognition not only increases enterprises’ need for R&D information and the cost of its disclosure, it also induces pseudo-high-tech enterprises to disclose their R&D information for incentives in the preferential policy. From the perspective of resource-based theory (Barney, 2001), which explains how firms can achieve and sustain competitive advantage through valuable, rare, inimitable, and non-substitutable resources, we argue that R&D information can be framed as a strategic asset. In the high-tech sector, recognized firms see their R&D achievements as valuable resources that contribute to competitive advantage. Consequently, these firms may selectively disclose information to maximize strategic benefits while safeguarding proprietary knowledge. In the context of high-tech enterprise recognition discussed in this paper, the market demand and information disclosure costs of enterprise R&D information may change. Besides, pseudo-high-tech enterprises are likely to strategically disclose their R&D information out of managerial self-interest. Our study provides a scenario that allows the co-existence of three motivations: information demand, information disclosure costs, and opportunistic or legitimate managerial self-interest. This highlights the complex interplay of factors influencing R&D disclosure practices and. underscores the need for nuanced regulatory frameworks.

In sum, this study integrates multiple theories to advance a holistic understanding of R&D disclosure dynamics in high-tech firms. The interaction between institutional pressures, stakeholder expectations, resource signaling, and information asymmetry reveals that R&D disclosure is not merely a response to regulatory requirements but a complex, strategically managed process influenced by certification status, resource constraints, and stakeholder relationships. These insights contribute to the literature on corporate disclosure by illustrating how high-tech certification can simultaneously drive transparency and enable selective disclosure, offering valuable implications for policymakers aiming to refine certification programs to foster genuine innovation.

Practical implication

Our study also provides empirical evidence to inform discussions on industrial policy, yielding practical implications. At the end of 2016, there was an intense debate about whether the government should enact industrial policies, focusing on whether the market’s role as the “invisible hand” should predominate or whether there should be an active role by the government on behalf of the people (Zhang & Lin, 2016). Yang et al. (2017) believe that the government may fail to achieve the goals set in an industrial policy because independent enterprises are often more motivated to meet the requirements of industrial policy to obtain benefits from it. Our findings indicate that industrial policy can both encourage enterprises to disclose more R&D information or, conversely, lead some firms to disclose selectively and strategically to obscure manipulation in R&D disclosure.

For policymakers, our findings suggest two main implications. First, the observation that genuine high-tech enterprises disclose more valuable R&D information compared to pseudo-high-tech firms can be leveraged to identify and address companies that may falsely claim high-tech status merely to benefit from government incentives. By more precisely analyzing the R&D disclosures of enterprises, policymakers can enhance the efficiency of government fund allocation and foster a more competitive market environment. Second, there is a need to further regulate and refine R&D information disclosure standards within annual reports, social responsibility reports, and ESG reports. Authorities should encourage industry organizations to develop disclosure standards and templates that balance competitive transparency with commercial confidentiality, ensuring that disclosures are both accessible and valuable to investors. This approach would enhance the availability and quality of R&D information, offering investors clearer references for making investment evaluations.

For corporate governance, our findings offer insights for shareholders in monitoring and mitigating potential R&D manipulation by high-tech enterprises. For instance, pseudo-high-tech firms may disclose vague or ambiguous R&D information to mislead investors. Thus, shareholders have a responsibility to encourage enterprises to elevate the strategic role of R&D within long-term business plans, ensuring that R&D spending is used responsibly and ethically, including in tax planning.

This duality—the market’s “invisible hand” (Smith, 1776, p.456) and a “promising government role” (Spiegel, 1999, p.222)—suggests that they can effectively coexist to foster genuine R&D innovation or, without sufficient oversight, fail to achieve these goals (Dong et al. 2020). Our findings also address the call by Sun (2018) and Hou and Yang (2019) to shift the focus of the debate from whether the government should enact industrial policy to how to enact industrial policy.

Batrancea et al. (2022) also highlights the importance of government support for small and medium-sized businesses due to their market significance and their contributions to national budgets. In recent years, Chinese regulators have gradually increased R&D disclosure requirements in annual reports, aiming to offer investors greater transparency. This aligns with a broader recognition of economic sustainability as a critical aspect of corporate governance. Previous studies have emphasized that robust R&D information disclosure supports sustainable economic development, informs governance strategies, and aids organizational decision-making. Our study reinforces these findings by demonstrating that the recognition of high-tech enterprises has positive implications.