Taiwan enterprises, responding to the economic opening-up policy of Mainland China, proactively relocate their production lines to Mainland China, in order to reduce production costs and in consideration of the vast market needs. Therefore, this study aims to explore whether innovative capacity can be reflected by R&D assets, and whether the R&D assets of the parent companies in Taiwan have any influences on the financial performance of their subsidiaries in China.
This study treats the listing and OTC companies in the electronics industry of Taiwan from 2002 to 2013 as the targets. The two-stage least square was used to investigate the causality among tangible human capital, R&D assets, and the financial performance of subsidiaries in Mainland China. The empirical findings showed that there is a significantly positive correlation between tangible human capital and R&D assets, as well as between R&D assets of the parent companies in Taiwan and the financial performance of their subsidiaries in Mainland China.
