For empirical analysis, scholars from different countries also get different results. Howrowitz (1962) is one of the earliest researchers of this domain. He collected America industry data and took advantage of C4 to measure market concentration. The analysis results showed that there is a positive correlation between market concentration and the strength of R&D investment. Kraft (1989) analyzed the data of West Germany companies and fond that the increase of market concentration will improve the level of technological innovation. Blundell et al. (1995) disposed the panel data from English manufacturing companies during 1972-1982 and found that the influence of market concentration to the amount of innovation is positive and monopoly companies get more chance to conduct innovation. Geroski (1990) hold the opinion that compared with highly concentration industry, competitive industries are more beneficial to enterprise technological innovation and monopoly powers hinder the innovation. Nick (1996) and Carlin et al. (2004) used empirical analysis to prove that the relation between competitive and innovation is positive and the improving of competition will encourage innovation. Different from the conclusions above, Scherer (1967) found that a reverse U shape is existed when describe the relation of competition and innovation. Aghion et al. (2005) believed that when the level of competition is low, the positive effect of competitive to R&D is dominant; when the level of competition increase to a certain point, the negative effect takes over, so the curve is reverse U shape. The conclusion is been tested by the empirical data from 330 companies from England. Moreover, reversed U shape of competition and innovation has been found in England, Sweden and France (Tingvall and Poldahl, 2006; Tingvall and Karpaty, 2011).

In China, early researches are about the introduction of theories and literature reviews. Liu and Wan (1997) pides 16industries into two groups according to the concentration and then analyzes the average technology development funds of each worker. He finds that industries with high concentration invest more in technology development Schumpeter (1942). Xu (2006) makes use of China’s industries section data and the empirical analysis finds that competition and profits got from monopoly are both in favor of technological innovation. Ping and Zhou (2007) analyzed the influence of market competition to R&D, which is based on the data of Chinese manufacturing companies for 5 years. In their research, market competition is measured by proportion of private enterprise and average profit rate of industry and a reversed U shape appears when analyzing the relationship of market competition. Chen et al. (2007) take advantage of Lerner Index to measure the industry concentration and R&D funding to measure innovation of technology and find that the industry market competition shows an inverted U-shaped relationship with innovation. Sun and Tian (2010) applied the data of 37 china’s industrial segments data of 2006, to analyze the relationship of competition and innovation with the support of simultaneous equations. The results suggest that competition is in favor of technological innovation, while the improvement of innovation aggravates market competition. 

According to the empirical analysis, early researches are data about macro R&D investment and recently, the research approaches have turned to micro companies. But the data are from manufacturing industry and the innovation research about microcompanies is weak; there is no research focused on technological innovation about listed companies. Listed companies are representation of Chinese companies and researches about their innovation behaviors are of great significance. The measurement of variables about micro researches is problematic. In many industries, the process of patent application would be longer than the period of investment return and enterprises may implement innovation but do not apply for patents. So the measurement of technological innovation with patents is a problem to be discussed. For the measurement of market competition, Herfindahl index seems to be the best, when internal market is the main market (Tingvall and Karpaty, 2011). For this reason, this study takes advantage of R&D investment to measure technological innovation and HHI to measure market competition; analyzes the influence of product market competition to enterprise technological innovation on account of data from Shanghai and Shenzhen non financial industries listed- companies during 2002-2010.