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Research on Effectiveness of the Government R&D Subsidies: Evidence from Large and Medium Enterprises in China

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DOI: 10.4236/ajibm.2014.49056    2,590 Downloads   3,316 Views   Citations

ABSTRACT

To cope with the fast-changing business environment, Chinese government makes every effort to increase business R&D subsidies. The aim of this paper is to examine the efficiency of Chinese government R&D subsidies on innovative performance and the moderating role of a firm’s R&D capacity. Based on the data from Chinese Large and Medium Firms during 1997-2012, we analyze whether government R&D subsidies affect a firm’s innovative performance, as well as how this effect works. The findings suggest that the firms that received increasing government R&D subsidies will have a better innovative performance, yet up to a point. Beyond this threshold, a greater share of government R&D subsidy will reduce a firm’s innovative performance. And such substitution effect is larger for firms with greater R&D capacity. Also, the firm’s own R&D capacity, size, industry technical levels have varying degrees of impact on the efficiency of government R&D subsidies. The findings of this paper may have practical value and help governments to develop relative regulations and policies.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

Zhang, X. and Wu, J. (2014) Research on Effectiveness of the Government R&D Subsidies: Evidence from Large and Medium Enterprises in China. American Journal of Industrial and Business Management, 4, 503-513. doi: 10.4236/ajibm.2014.49056.

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