2016
DOI: 10.1016/j.respol.2016.03.002
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Government-subsidized R&D and firm innovation: Evidence from China

Abstract: This study investigates the effects of government R&D programs on firm innovation outputs, which are measured by the number of patents, sales from new products, and exports. Particularly, we examine the effects of Innovation Fund for Small and Medium Technology-based Firms (Innofund), which is one of the largest government R&D programs that support R&D activities of small and medium-sized enterprises in China. Using a panel dataset on Chinese manufacturing firms from 1998 to 2007, we find that Innofund-backed … Show more

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Cited by 420 publications
(245 citation statements)
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“…First, firms affiliated with higher levels of governments are under greater pressure to innovate in order to fulfill governments’ innovation objectives. Like those in many other countries, higher‐level governments in China (e.g., the central government) aim to transform the country into an innovation‐driven economy and view firm innovations as an important means to achieve such objectives (Guan & Yam, ; Guo, Guo, & Jiang, ). As a result, higher‐level governments set up more influential science and technology programs through which they provide financial and human resources to support firms that follow the government's innovation priorities (P. Fan & Watanabe, ; Z. Li & Li, ).…”
Section: Hypothesesmentioning
confidence: 99%
“…First, firms affiliated with higher levels of governments are under greater pressure to innovate in order to fulfill governments’ innovation objectives. Like those in many other countries, higher‐level governments in China (e.g., the central government) aim to transform the country into an innovation‐driven economy and view firm innovations as an important means to achieve such objectives (Guan & Yam, ; Guo, Guo, & Jiang, ). As a result, higher‐level governments set up more influential science and technology programs through which they provide financial and human resources to support firms that follow the government's innovation priorities (P. Fan & Watanabe, ; Z. Li & Li, ).…”
Section: Hypothesesmentioning
confidence: 99%
“…By analyzing the influence of the decision parameters on the stability of the system, we can conclude that the firms should not take an overlarge adjustment parameter when making innovation output decisions, otherwise the system will fall into an unstable state with high entropy and have an adverse impact on the firms' correctly making decisions and their profits. We further set a = 8, b = 2, c 1 = 0.5, c 2 = 0.6, θ = 0.6, λ = 1 and get the 3-D stability region of the system with change of α, β, ω in Figure 7 according to Jury stability criterion which is given in Equation (13). We can find that, as the government innovation subsidy rate ω increases, the stability region increases in the area of the α − β plane.…”
Section: The Influence Of the Decision Parameters On The Stability Anmentioning
confidence: 99%
“…We further set = 8, = 2, = 0.5, = 0.6, = 0.6, = 1 and get the 3-D stability region of the system with change of , , ω in Figure 7 according to Jury stability criterion which is given in Equation (13). We can find that, as the government innovation subsidy rate increases, the stability region increases in the area of the − plane.…”
Section: The Influence Of Government Innovation Subsidy Rate On the Smentioning
confidence: 99%
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“…Since R&D generally involves market failure, government funding could increase R&D activities and move them closer to the social optimum [1]. In addition, R&D intensity and subsidies have positive correlations with the probability of innovation [2], and government-sponsored R&D creates additional innovations for beneficiaries [3][4][5]. Thus, government grants that encourage private R&D activities are common in many OECD countries [6].…”
Section: Introductionmentioning
confidence: 99%