Impact of Chinese Government Subsidies on Enterprise Innovation: Based on a Three-Dimensional Perspective

Lili Jia, Eunyoung Nam and Dongphil Chun
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Lili Jia: School of Economics and Management, Taishan University, Taian 271000, China
Eunyoung Nam: College of Business Administration, Sejong University, Seoul 05006, Korea
Dongphil Chun: Graduate School of Management of Technology, Pukyong National University, Busan 48547, Korea

Sustainability, 2021, vol. 13, issue 3, 1-22

Abstract: Government subsidies are an important means to guide enterprises’ investment in technological innovation. While countries are increasing government subsidies to enterprises, how to effectively leverage government subsidies is a concern of the academic community. At present, scholars’ research conclusions on the impact of government subsidies on enterprise technological innovation include promotion effect, extrusion effect, and mixing effect. Relevant research is often conducted from a single perspective. This paper studies the relationship between government subsidies and enterprise technological innovation, and integrates the macro-institutional environment, meso-market structure, and micro-corporate governance into the same framework. Taking information transmission, software, and information technology service companies as samples, it analyzes the influencing factors of the Chinese government research and development (R&D) subsidies on enterprises’ innovation investment. This paper uses Stata16 software to perform the least square analysis. The research shows that the Chinese government R&D subsidies have a significant incentive effect on corporate technology innovation investment. The higher the marketization process, the more dispersed its equity, and the government subsidy promotes corporate technology innovation investment. The more significant it is; for industries with different product market competition, government subsidies have no significant impact on enterprises’ investment in technological innovation. Based on empirical research conclusions, this study puts forward policy recommendations to increase the intensity of government subsidies and optimize the structure of corporate equity to increase the leverage effect of government subsidies.

Keywords: Chinese government subsidies; technology innovation investment; institutional environment; market structure; corporate governance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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