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Can government subsidy strategies and strategy combinations effectively stimulate enterprise innovation? Theory and evidence

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  • Wanshu Wu

    (Huaqiao University)

  • Kai Zhao

    (Huaqiao University)

  • Lei Li

    (Huaqiao University)

Abstract

This paper tries to disentangle between the effects of non-R&D and R&D subsidies, and explores the mechanism of different subsidies and their combination on R&D investment and innovation output of listed enterprises in China by combining theory with empirical research. Based on the unbalanced panel data of 2707 Chinese listed enterprises from the year 2008 to 2015, this study confirms that both R&D subsidy and non-R&D subsidy have an incentive effect on the R&D investment, but the former is more effective than the latter. When R&D subsidy is at a high level, there is a positive relation between government non-R&D subsidies and enterprise R&D investment; sufficient non-R&D subsidies can effectively strengthen the incentive effect of R&D subsidies on R&D investment of enterprises. Furthermore, R&D subsidy can promote the innovation output of enterprises through direct and indirect paths, whereas, non-R&D subsidy or subsidy policy-mix has a certain “masking effect” on the innovation output.

Suggested Citation

  • Wanshu Wu & Kai Zhao & Lei Li, 2021. "Can government subsidy strategies and strategy combinations effectively stimulate enterprise innovation? Theory and evidence," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(2), pages 423-446, July.
    • Handle: RePEc:spr:epolit:v:38:y:2021:i:2:d:10.1007_s40888-021-00230-y
    DOI: 10.1007/s40888-021-00230-y
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    Cited by:

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    2. Gao(高凯), Kai & Wang(王玲), Ling & Liu(刘婷婷), Tingting & Zhao(赵华擎), Huaqing, 2022. "Management executive power and corporate green innovation——Empirical evidence from China's state-owned manufacturing sector," Technology in Society, Elsevier, vol. 70(C).
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    4. Pan, Xianyou & Yuan, Ge & Wu, Xianhua & Xie, Pinjie, 2023. "The effects of government subsidies on the economic profits of hydrogen energy enterprises – An analysis based on A-share listed enterprises in China," Renewable Energy, Elsevier, vol. 211(C), pages 445-451.
    5. Han Xiao & Cheng Ma & Hongwei Gao & Ye Gao & Yang Xue, 2022. "Green Transformation of Anti-Epidemic Supplies in the Post-Pandemic Era: An Evolutionary Approach," IJERPH, MDPI, vol. 19(10), pages 1-26, May.
    6. Bingqiang Li & Shan Wang & Nannan Dong & Jinzhi Li & Xi Li & He Yu, 2023. "Empirical Analysis of Subsidy Industrial Policy’s Effect on Export Innovation in the Chinese Manufacturing," SAGE Open, , vol. 13(4), pages 21582440231, November.

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    More about this item

    Keywords

    Non-R&D subsidies; Strategy combination; Subsidy policy-mix; R&D investment;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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