Does the high- and new-technology enterprise program promote innovative performance? Evidence from Chinese firms

Xiaoyong Dai and Fang Wang

China Economic Review, 2019, vol. 57, issue C

Abstract: This study evaluates the unique high- and new-technology enterprise (HNTE) program implemented in China. The program grants a reduced corporate income tax rate to certificated HNTEs. Based on a sample of Chinese listed firms during 2006–2016, we investigate the impact of HNTE certification on firms' R&D intensity and productivity using a combination of the propensity score matching approach and difference-in-differences estimator. The results confirm the overall effectiveness of the program in promoting innovative performance among Chinese listed firms in terms of both R&D intensity and productivity. Such effects are persistent over the valid certification period. However, the overall effects mask substantial heterogeneity across different types of certification users. Positive effects are mainly driven by repeatedly certificated firms, while no significant effects are found for firms acquiring their HNTE certificate for the first time. By distinguishing one-time and highly qualified certifications, we reveal the potential existence of fraudulent HNTEs. These results imply that the effectiveness of government programs in supporting innovation could be improved through a more thorough policy design and implementation.

Keywords: HNTE certification; R&D intensity; Productivity; Chinese listed firms (search for similar items in EconPapers)
JEL-codes: C14 G38 L52 O32 O38 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:57:y:2019:i:c:s1043951x19300914

DOI: 10.1016/j.chieco.2019.101330

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