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Do government grants promote innovation efficiency in China's high-tech industries?

Author

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  • Hong, Jin
  • Feng, Bing
  • Wu, Yanrui
  • Wang, Liangbing

Abstract

Despite extensive discussion about the important role of government in enterprise development, the function of government grants in the innovation activities of high-technology (high-tech) industries is still unclear. In this paper, the stochastic frontier model and a unique panel data set of 17 high-tech industries in China spanning the 2001–2011 period are applied to explore how government grants affect the innovation performance of these industries. Results indicate that the innovation efficiency of high-tech industries rapidly improved in the past decade. However, it is found that government grants exert a negative influence on innovation efficiency of high-tech industries. However, the impact of private R&D funding is significant and positive. Furthermore, when the high-tech industries are grouped into five sub-industries, the results show that government grants had different effects on the innovation in each sub-industry.

Suggested Citation

  • Hong, Jin & Feng, Bing & Wu, Yanrui & Wang, Liangbing, 2016. "Do government grants promote innovation efficiency in China's high-tech industries?," Technovation, Elsevier, vol. 57, pages 4-13.
    • Handle: RePEc:eee:techno:v:57-58:y:2016:i::p:4-13
    DOI: 10.1016/j.technovation.2016.06.001
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