Date Published: June 12, 2019
Publisher: Public Library of Science
Author(s): Ziyuan Sun, Yanli Li, Man Wang, Xiaoping Wang, Yiwen Pan, Feng Dong, Stefan Cristian Gherghina.
This paper aims to demonstrate the impact of coal enterprises’ vertical integration on the performance of innovation corporate social responsibility (ICSR) and to elaborate its specific transmission path through financing structure and market power. This paper takes the data of A-share listed coal company from 2008 to 2017 as samples, uses input-output table method to measure the degree of vertical integration, and explores the relationship between the four factors through multiple linear regression and Bootstrap method. We found that: (1) the vertical integration of coal enterprises has positive incentives for the promotion of ICSR. (2) Financing structure and market power play a chain intermediary role in this process of incentive. (3) In areas with high marketization process, vertical integration has more significant incentive effect on ICSR. The paper extends the research on the relationship between vertical integration and innovation, which provides a reference for the improvement of China’s supply-side reform and corporate social responsibility (CSR) fulfillment policy. It is helpful to promote the sustainable development of the coal industry, stimulate the innovation vitality of enterprises, and improve the fulfillment of CSR.
With the increasingly fierce competition in the global low-carbon economy, it has been more and more essential to improve energy efficiency and promote the sustainable development of the resource industry while ensuring the interests of all people. Fossil resources play an important role in China’s economic and social development. The energy structure of “rich coal, deficient oil, and lean gas”  determines that China is still the largest coal producer and consumer in the world. According to the statistical yearbook issued by China’s national bureau of statistics, China’s coal production and consumption accounted for 45.6% and 46.4% of the world in 2017, respectively. Among them, coal consumption accounted for 60.4% of China’s primary energy consumption structure, resulting in fossil energy accounting for 82.3% of China’s primary energy production structure. Although coal consumption in China has a downward trend, it still maintains about 59% of China’s total energy consumption in 2018 (Fig 1). Coal combustion produces a large amount of wastewater, waste gas, and solid waste every year. Therefore, as a kind of high pollution and high emission non-clean energy , coal must shoulder the social responsibility of protecting the environment. The original extensive management mode of China’s coal industry needs to be further optimized.
First, Frankel et al  demonstrated a significant positive correlation between firm vertical integration and enterprise performance, but which contradicted Kindleberger et al. . This result may be attributed to the dual externalities of vertical integration, that is, vertical integration exists the distribution of operating profit among different branches while promoting enterprise resource synergy. On the one hand, enterprises adopt and absorb the tangible and intangible assets of the acquired party through mergers and acquisitions. In addition, it can form a synergistic effect with the original resources of the enterprise itself, which reduces the negative externalities, strengthens the control of the market and improves the level of innovation factor reserve. Through vertical integration, coal enterprises will leave the transactions between the raw coal, natural gas and power industries upstream and downstream of the coal industry chain in the enterprise. It will save the negotiation and transaction costs between the upstream and downstream manufacturers, and form the integration of capital and technology between different industries , which promotes the improvement of innovation capability of coal industry enterprises and ensures the ICSR performance. On the other hand, the vertical extension of the enterprise in the industrial chain will inevitably involve the redistribution of operating profit among the branches . Besides, as the scale of the enterprise expands, the management cost and administrative levels will further increase. The mastery of the innovation elements will be weakened, thus inhibiting the innovation ability of enterprises and affecting the ICSR performance. At the same time, considering that the government’s guidance is the main cause of coal enterprises’ vertical integration and fulfilling social responsibilities, coal enterprises have strategic innovations that cope with government assessment indicators to defraud rewards. Therefore, the actual ICSR performance of enterprises may not be improved.
China is a large resource country, and the coal industry is the main resource supplier of China’s energy economy system. Therefore, the integration effect of the coal industry chain is of great significance for improving the efficiency of resource utilization, promoting resource intensive and centralized management, ensuring clean production of coal resources, and promoting the healthy and sustainable development of the resource industry. With the acceleration of China’s supply-side structural reform and the improvement of related technology, vertical integration of coal enterprises is becoming more and more common. As to whether vertical integration can help promote ICSR performance, the existing research literature has not reached a unified conclusion. The reason is that the existing research only focuses on the direct relationship between vertical integration and ICSR performance, but neglects the way that vertical integration affects it.