Market segmentation, marketisation change speed and R&D investment of private firms

This study examines the impact of market segmentation on R&D investment in transitional economy. Based on the analysis of 14,032 Chinese private firms, we find that market segmentation has an inverted U-shaped relationship with firm R&D investment, that is, private firms’ innovation investment presents a trend of first increase and then decrease in relation to the deepening of market segmentation. In addition, this study explores the moderating effect of marketisation change speed (MCS), and the results indicate that MCS strengthens the inverted U-shaped relationship between market segmentation and R&D investment of private firms. Our findings provide insights into how emerging economies leverage the role of the market to better stimulate private sector investment in innovation.