Abstract: As the R&D activities of enterprises contain high risks and uncertainties, the government provides innovation subsidies to help enterprises cope with market failures. The relationship between innovation policy and enterprise innovation behavior has always been a hot topic in the field of innovation management. Based on WSR methodology, using the data of listed manufacturing companies in CSMAR database from 2009 to 2018, this study explains the best coping strategies adopted by decision-makers in the face of the external objective environment from enterprise management level, explores the different mechanisms of different policy subsidy tools for enterprises to carry out innovation activities, and makes theoretical analysis and empirical test on the relationship among government innovation subsidies, executive relationship embedding and enterprise R&D investment decision-making. It is found that different innovation subsidy policy tools have different effects on R&D investment of enterprises; enterprise managers with embedded political relations and academic relations have richer information resources and are more likely to face risks and costs brought by uncertainty, so they tend to make decisions of increasing R&D investment and starting R&D projects. WSR methodology provides an investigation into the factor of “Renli” for the innovation decision-making process of enterprises and helps enterprise managers to use management scientific knowledge and organize the best “Wuli” and “Shili” to form their innovation behavior rules.

Key words: WSR methodology, R&D subsidies, enterprise R&D investment decision-making, executive social embeddednes