- Title
- Do government subsidies stimulate firms’ R&D efforts? Empirical evidence from China
- Creator
- Sun, Xiaohua; Yu, Runqun; Wang, Yun; Colombage, Sisira
- Date
- 2020
- Type
- Text; Journal article
- Identifier
- http://researchonline.federation.edu.au/vital/access/HandleResolver/1959.17/173364
- Identifier
- vital:14678
- Identifier
-
https://doi.org/10.1080/19761597.2020.1719018
- Identifier
- ISBN:1976-1597 (ISSN)
- Abstract
- Government subsidies have been one of the popular policy instruments to stimulate firms’ R&D activities. We empirically investigate the impact of government subsidies on firms’ R&D decisions of listed manufacturing firms in China. In contrast to prior studies, we split firms’ R&D decision into two elements of ‘whether to invest decision’ and ‘how much to invest decision’. The influences and mechanism of government subsidies on R&D decision are theoretically analysed to develop hypotheses tested in this study. We find that government subsidies have a promotion effect on both elements of the firms’ R&D decision. Moreover, we also demonstrate the heterogeneous effects of government subsidies between state-owned and non-state firms. Due to the inherent principal-agent problem of state-owned firms and soft budget constraint, subsidies can only increase the probability to undertake R&D activities but cannot stimulate further investment in R&D efforts. However, our results indicate that government subsidies take effects in both elements of R&D decision for non-state firms. © 2020, © KOSIME, ASIALICS, STEPI 2020.; National Natural Science Foundation of China [grant number 719010481] Liaoning Provincial Federation Social Science Circles of China [grant number 2019lsljdwtkt-008] Ministry of Education Project of Humanities and Social Sciences in China [grant number 18YJC790171]
- Publisher
- Routledge
- Relation
- Asian Journal of Technology Innovation Vol. 28, no. 2 (2020), p. 163-180
- Rights
- Copyright © KOSIME, ASIALICS, STEPI 2020
- Rights
- This metadata is freely available under a CCO license
- Subject
- 2001 Communication and Media Studies; Government subsidies; Heckman two-step model; R&D decision; state-owned firms
- Reviewed
- Funder
- National Natural Science Foundation of China [grant number 719010481] Liaoning Provincial Federation Social Science Circles of China [grant number 2019lsljdwtkt-008] Ministry of Education Project of Humanities and Social Sciences in China [grant number 18YJC790171]
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