Effect Of Government S&T Investment On Enterprise Technological Innovation

Enterprise is not only the mainstay of the market economy, but more important it is also the main actor in technological innovation. Enterprise plays the role as the core nodes in the network for science and technology (S&T) innovation; and it has been a dominant force to promote technological innovation and research results application in industry. Innovation is the primary approach for enterprises to enhance the competitiveness; however, industrial firms are facing challenges from high cost, high risk, externalities, market complexity and high uncertainty in technological innovation. In an open innovation ecosystem, the government can rely on science and technology investment to promote and the linkage and optimization of technological innovation network, making profound impact on enterprise technology innovation. Enterprise needs a clear understanding on government science and technology investment as a resource, to enhance active consciousness in improving its innovation capacity with government investment.How to reasonably understand and use government S&T investment to enhance enterprises’ capability in technological innovation has become a real problem that Chinese enterprises must face and solve. From a practical point of view, absorbing and utilizing government investment funding in science and technology innovation has worldwide been a universal means and pathway for enterprises to deal with uncertainty, externalities and high risk. However, due to insufficient enterprise innovative initiative and innovative management capabilities, the efficiency of China’s enterprises in using government science and technology funding, as a whole, is not high, and their awareness and capacity in increasing innovation performance by means of government funding in science and technology is not strong.From a theoretical perspective, the relevant research in enterprise technology innovation refers to the relationship between internal organizational factors and external factors of market relations, but study on government S&T investment’s effect on innovation management and innovation strategic decision-making is weak. Most relevant research refers to exploration based on government public administration perspective, rather than enterprises’innovation management decision. Since such a research model views enterprises as passive recipients of government S&T policy, there is a lack of in depth analysis of enterprise innovation behavior and process. Thus, we are unable to fully consider the impact of government S&T investment as a factor on technological innovation at the micro level. In taking into account this reality and theoretical background, it is necessary to (1) analyze the impact of government S&T investment on enterprises technological innovation; (2) further recognize the intrinsic relationship between factor of government S&T investment and factors of enterprise technological innovation, find government S&T investment patterns and comprehensive effects on enterprise technological innovation, and then think the basic strategies to enhance innovation and development capabilities of enterprises with government S&T funding.This paper is designed into four sessions:(1) Literature review:using analysis and synthesis methods for exploring regional innovation network, the S&T policy of the government, S&T investment’s influence on enterprise technology innovation. (2) Theoretical studies:theoretical deductive method is used, i.e.. investigating the effects of government S&T investment on enterprise technological innovation from innovation chain, enterprise innovation networks and business innovation decision-making; through analyzing the mechanism and role of government S&T investment’s impact on corporate R&D and technology transfer to the production process and exploring the mode of action and effects of government S&T investment in the enterprise technology innovation, the theoretical assumptions are proposed. (3) Empirical investigation:on the ground of distinguishing the internal R&D investment from external R&D investment, government industrial R&D from public R&D investment, using industry-period panel data model is constructed to test, modify and apply the theoretical hypothesis. (4) Applied research:on the basis of the literature, theoretical and empirical research, combing with the enterprise innovation practice in China, a decision-making framework for enterprise technology innovation to use government S&T investment is designed to propose the strategy of government S&T investment to promote enterprise technological innovation, in both business and government perspectives.It is found that corporate absorption of government S&T investment can directly and indirectly generate complex effects on enterprises’innovation process in innovation chain, enterprise innovation decision-making and business innovation networks. The effects include amplification and incentive, extrusion and alternative, overflow and diffusion, as well as overall network optimization through some specific modes such as straight lines, triangles and three hinges. Absorption of governmental industrial R & D investment is helpful for enterprises to directly increase internal and external innovation input and promote the output directly and indirectly; while absorption of governmental public R & D investment is good for enterprises to directly increase internal innovation input and indirectly promote the output. Companies need to enhance their innovation capacity through reasonably using government S&T investment for internal R&D system optimization, external innovation network expansion and intellectual resource gathering; government needs to improve regional innovation support and service system for assisting industrial technology innovation, and optimize the mechanism and environment of regional innovation, to continually support business innovation by S&T investment.The innovation of this study is mainly reflected in three aspects:(1) It is to explore the effects of government S&T investment and finds the investment’s direct and indirect mechanism of action in business innovation, from the perspectives of innovation chain, enterprise innovation network and business innovation decision-making. (2) It summarizes government S&T investment’s effect patterns and the combined effect in enterprise technology innovation; and thus builds a theoretical model of government S&T investment affecting enterprise technology innovation. (3) It establishes the basic decision-making framework for enterprises to introduce government funding for technological innovation; to propose the fundamental strategy of government S&T investment to promote enterprise technological innovation in improving corporate innovation management and government investment optimization perspectives.