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Functional or selective policy? - Research on the relationship between government intervention and enterprise innovation in China

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  • Liu, Taoxiong
  • Yan, Wenwen
  • Zhang, Yadi

Abstract

Innovation is an important driving force for achieving high-quality economic development. Low-quality innovation has strong imitation characteristics and is more dependent on external resource support. Therefore, functional government policy, as a more market-friendly policy, will promote innovation output of high-quality innovation enterprises to a greater extent, while selective government policy is the opposite. Based on the panel data regression of the data of Chinese listed companies from 2009 to 2020, this paper studies the relationship between listed enterprises' innovation output, innovation quality, and government's functional and selective policies. The findings indicate that functional policies have a stronger promotion effect on the innovation output of enterprises engaged in high-quality innovation activities, and this effect is prominent in the more basic and broader coverage of policies. It is also found that the promotion effect of selective policies on the innovation output of enterprises engaged in high-quality innovation activities will be weakened, and this effect is prominent in the more selective policies. This result is more prominent in south China, non-state-owned enterprises and high-tech industries by expanding the discussion of enterprises with different regions, enterprise attributes and industry technology attributes.

Suggested Citation

  • Liu, Taoxiong & Yan, Wenwen & Zhang, Yadi, 2023. "Functional or selective policy? - Research on the relationship between government intervention and enterprise innovation in China," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 82-96.
    • Handle: RePEc:eee:reveco:v:86:y:2023:i:c:p:82-96
    DOI: 10.1016/j.iref.2023.03.012
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    References listed on IDEAS

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    Cited by:

    1. Bai, Hengrui & Huang, Lingyu & Wang, Ziqi, 2024. "Supply chain financing, digital financial inclusion and enterprise innovation: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Xiangxia Liu & Shen Liu, 2024. "Green Technology Innovation, Capital-Factor Allocation, and Manufacturing-Export Resilience," Sustainability, MDPI, vol. 16(3), pages 1-20, February.
    3. Tang, Dapeng & Yu, Qian & Gebrehans, Mebrahtu Tesfagebreal & Wang, Lulu, 2023. "The asymmetric innovation effects of heterogeneous government subsidies: A new perspective from GDP target deviation," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).

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