Management Review

›› 2019, Vol. 31 ›› Issue (11): 94-107.

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The Impact of Public S&T Subsidies on Private R&D Output: An Empirical Study on Large and Medium Sized Industrial Enterprises in China

Ma Wencong, Ye Yangping, Li Xiaozhuan, Liao Jiancong   

  1. School of Management, Guangdong University of Technology, Guangzhou 510520
  • Received:2017-02-16 Online:2019-11-28 Published:2019-11-30

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Abstract:

Based on the data of large and medium-sized industrial enterprises in China during 2009 to 2014, this paper explores the effect that three kinds of public S&T subsidies, i.e., direct subsidies, direct tax credits and indirect tax credits, respectively have on private R&D expenditure. And the moderating effects of other factors like intellectual property right protection, property types, enterprise scale, R&D capital stocks and knowledge stocks are also analyzed. The conclusion is that public direct subsidies have a significant negative impact on new product innovation, but have no significant effect on patent application. Public direct tax credits have a significant positive effect on enterprises' new product innovation and patent application, while indirect tax credits do not have. Their effects on enterprises' R&D activities are different, depending on the characteristics of enterprises. In the region where the intellectual property is well protected, the simulative effect of all the three kinds of public S&T subsidies on private R&D is significant. Therefore, government policy makers should take into consideration such factors as the scale, nature, life cycle, innovation ability of the enterprise and the intellectual property protection when developing a policy package that resorts firstly to credits, secondly to direct subsidies and thirdly to other funding channels.

Key words: public S&T subsidies, private R&D output, tax credits, subsidies policy, intellectual property right