Why do Chinese enterprises make imitative innovation?—An empirical explanation based on government subsidies

Abstract

The previous literature analyzed the widespread imitative innovation of Chinese enterprises from various perspectives, including enterprises' rational choice of cost-gain, property rights system, human capital and policy environment. However, this paper provides a brand-new perspective on government subsidies for the reasons behind the imitative innovation of enterprises. According to the statistics from Chinese enterprise-labor matching, we found that government subsidies stimulated enterprises to make “imitative innovation” through patent purchase rather than independent R&D. Government subsidies were used for low-risk “imitative innovation” because of enterprises' rent-seeking behavior, low R&D ability and the review of government subsidy projects. Based on the above conclusions, this paper suggests that the government should reduce or withdraw its intervention in enterprise innovation and implement the post-subsidy and post-evaluation mechanism for government-subsidized programs.

The “heterogeneous” effect of government grants on bank lending

“…Government grants are crucial "helping hands" in the transition economy by lowering the threshold to entry for industry and investment, which may result in an imbalance between price and cost. One study [28] finds that government grants stimulated enterprises to make "imitative innovation" through patent purchase rather than independent R&D. Other studies [29][30][31] find that government grants can result in zombie companies and are most frequently seen in overcapacity industries including steel, cement, and coal.…”

Government innovation subsidy, executives’ academic capital and innovation quality: Evidence from pharmaceutical companies in China

“…In order to advance goals of the public interest, government subsidies may establish policies to support innovations generally or specifically target a certain type of new technology ( Shu et al, 2014 ; Huang et al, 2019 ). There are numerous types of assistance that government subsidies can provide, including tax refunds and innovation subsidy ( Ren, 2022 ; Song and Zhao, 2022 ). The government faces a significant challenge in enhancing the quality of innovation.…”

Research on the mechanism of government subsidy on enterprise innovation based on industry-university-research collaboration

“…Secondly, previous research has predominantly concentrated on the unilateral impact of government subsidies on enterprise innovation in different industries, which did not play a role in the framework of IUR collaboration [ 44 , 45 ], and has overlooked the interdependence between the process and the result of enterprise innovation [ 46 ]. This oversight has resulted in notable discrepancies in research outcomes, with some asserting that government subsidies positively impact corporate innovation [ 47 , 48 ], while others argue for a negative or non-linear influence [ 49 , 50 ]. Thirdly, empirical studies frequently make the assumption of homogeneity, thereby disregarding the diversity that exists within enterprises.…”