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Keywords

government subsidies, financing constraints, R&D input, patent output

Abstract

Technological innovation by enterprises is a quasi-public good, non-competitive, and non-exclusive, and the diffusion and replication of technological achievements make the rate of return on R&D investment by enterprises much lower than that of society. Therefore, the government needs to increase its fiscal policy support and use various forms of government subsidies to indirectly intervene to guide enterprises to invest in R&D and innovation. Considering the long R&D and technological innovation cycle of enterprises and a large amount of capital required, the financing constraint has been a major factor limiting the technological innovation of most enterprises in China, and government subsidies are used to stimulate enterprises’ R&D investment by directly giving them financial subsidies to alleviate their financing difficulties. In this context, the relationship between government subsidies, financing constraints and enterprise technology innovation is investigated through the construction of a mediated transmission model based on a sample of A-share enterprises in Shanghai and Shenzhen from 2007 to 2020. The results found that the financing constraint faced by enterprises would have a suppressive effect on their technological innovation R&D input and patent output; there is a certain transmission effect between government subsidies, financing constraints and enterprises' technological innovation R&D input and patent output, which is manifested as a masking effect; after further differentiation by adding life cycle variables, it is found that government subsidies can accelerate the technological innovation patent output of enterprises in the growth period, while it has a negative impact on the R&D input, maturity and patent output of enterprises in the growth period. After further differentiation by adding life-cycle variables, it is found that government subsidies can accelerate the technological innovation patent output of enterprises in the growth period but have no significant effect on the R&D input of enterprises in the growth period and the R&D input and patent output of enterprises in the maturity and decline periods. Therefore, to improve the efficiency of the implementation of government subsidies, it is recommended to address the negative impact of financing constraints on enterprise technological innovation at the source, strengthen the supervision of government subsidy funds by multiple sub-indicators, and at the same time develop different subsidy models for enterprise technological innovation according to the life cycle. The marginal contributions of this paper are: Firstly, it further enriches the research on the impact of government subsidies and financing constraints on enterprise technological innovation by embedding it from the perspective of the enterprise life cycle; Secondly, it clarifies the impact path of government subsidies on enterprise technological innovation based on financing constraints as an intermediate transmission variable and complements the relevant theoretical foundation; Thirdly, the findings of this paper help to address the question of whether the government subsidizes; Fourthly, the findings of this paper help to address the questions of whether government subsidies play a catalytic role in enterprises’ technological innovation and when the timing of government subsidies can produce the greatest innovation performance, and provide a reference for the government to make better policies on subsidies, the timing of subsidies and improvement of government subsidies in the future.

DOI

10.16315/j.stm.2023.03.008

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