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How does government R&D subsidies affect enterprises’ viability? An investigation on inverted U-shaped relationship

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  • Han, Yajie
  • Han, Liyan
  • Liu, Chengkun
  • Wang, Qisong

Abstract

Based on the theory of New Structural Economics, this study investigates the non-linear relationship between government R&D subsidies (RDS) and enterprises’ viability (VIA) in China, utilizing data from A-share listed advanced manufacturing enterprises. The findings reveal an inverted U-shaped relationship, where VIA initially increases and subsequently decreases as RDS intensifies. Furthermore, we examine the impact of technological convergence between the digital and real economy industries (TCG) on this relationship and find that TCG strengthens the curvilinear relationship. This study provides valuable insights for formulating advanced manufacturing policies that address structural needs, thereby fostering high-quality development of the real economy.

Suggested Citation

  • Han, Yajie & Han, Liyan & Liu, Chengkun & Wang, Qisong, 2024. "How does government R&D subsidies affect enterprises’ viability? An investigation on inverted U-shaped relationship," Finance Research Letters, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324012649
    DOI: 10.1016/j.frl.2024.106235
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    Keywords

    Advanced manufacturing enterprises; Government R&D subsidies (RDS); Viability; Generalized Data Envelopment Analysis (GDEA); New Structural Economics (NSE);
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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