Institutional capital and corporate innovation frictions: Evidence from China’s university science parks

We examine whether institutional infrastructure reduces corporate frictions in innovation investment. Using a comprehensive panel of Chinese listed firms from 2008 to 2023, we study the effect of university–industry research collaboration facilitated by National University Science and Technology Parks (NUSTPs). Firms that partner with NUSTP-hosting universities produce significantly more patents, particularly invention patents, receive more patent citations, and gain greater access to government R&D subsidies relative to firms collaborating with universities outside such parks. The impact is strongest for state-owned enterprises, firms with limited internal R&D capacity, and firms whose major customers are government agencies, consistent with institutional incentives and substitution effects in innovation sourcing. Geographic proximity and the density of incubating firms further amplify innovation output, highlighting the role of localized institutional capital. Overall, NUSTPs operate as external intangible assets that alleviate innovation investment frictions, enhance firms’ ability to convert research partnerships into high-quality innovation, and reshape the allocation of innovative activity in emerging markets.