Effect of government subsidies on firm innovative performance in China’s shale gas industry

Abstract

To achieve the goals of carbon peaking by 2030 and carbon neutrality by 2060, the Chinese government must reduce fossil energy consumption, stimulate the extraction of unconventional natural gas such as shale gas, and construct a green, low-carbon cycle economic development system. This study investigates the impact of government subsidies on shale gas companies’ research and development (R&D) inputs and innovation performance from multiple perspectives, including internal and external environments and the nature of the companies. The sample consists of Chinese shale gas companies listed between 2013 and 2019. The findings were as follows. First, the investment made by shale gas firms in R&D mediates the relationship between government subsidies and firm performance in technological innovation. Second, the contribution of government subsidies to innovation performance differs in different internal and external regulatory environments. Finally, the intensity of intellectual property protection (IPP) positively moderates the direct and mediating models of government subsidies and innovation performance. Accordingly, the government should increase its contributions to the shale gas industry, improve the regulatory mechanism for donations, and strengthen the protection of intellectual property rights for the R&D of new shale gas technologies.

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