Impact Of Tax Incentives On Enterprise Innovation Performance

Innovation is the key link to regulate economic structure and shift the way of economic growth, and also the centre power of China social economic fast and sustainable development, especially in the critical period of a new round of great-leap-forward development. The principal part of innovation system is enterprises, and its innovation activities play important strategic position in promoting country’s innovation ability. But the statistics from related department in our country show that, although the enterprises in our country maintain rising trend in R&D input intensity, there is still a large gap comparing with the developed country, and depends on foreign technology highly, there is rarely company which has the independent intellectual property and core technology in the country. This suggests that the innovation ability of our country’s enterprises is still extremely weak. However, enterprise innovation activities will be influenced by its own economic characteristics, and the existence of market failure that makes the market mechanism failing to achieve the optimal allocation of resources, the government need to intervene and provide a good policy environment to arouse the innovation power of the enterprises. Tax incentives are adopted by governments around the world as they are more likely inclusive and to use the enterprise and market forces. This article studying the effect of tax incentives to innovation performance from the microscopic perspective of enterprise, further enrich the research on enterprise innovation, and provide reasonable reference for government policy making at the same time, and more importantly, it can help the enterprise selects appropriate incentives to serve the enterprise innovation activities in the process of business practice.According to the topic, using the literature material method, content analysis, questionnaire investigation and statistical analysis method, the article studies that how tax incentive policies affect mechanism of innovation performance from the following aspects in accordance with logic of asking questions, analyzing and solving the problems:(1) To review previous research on tax incentives and innovation performance, understand the current situation and problems of enterprise innovation activities, and clarify the development process and characteristics of the preferential tax policy in our country.(2) Based on the economic growth theory, to analysis how tax incentives affect innovation performance through innovation input, and build the appropriate conceptual model.(3) To collect data by means of questionnaire survey on tax incentives, innovation input and innovation performance, test the scale reliability, validity and confirm the theoretical model and research assumptions with the stepwise regression analysis method, then use the listed company data to do further argument.(4) To contrast the current preferential tax policy with main developed countries, and propose suggestions on promoting the incentive effects of tax policy combing with the empirical results.This paper researches the relationship between the tax incentives and enterprise innovation performance from the visual angle of innovation input. The framework of "tax incentives-innovation input-innovation performance" is established and theoretical assumptions on tax policy affecting innovation performance through capital and labor investment are put forward. The questionnaire survey data of301enterprises as well as public data of281listed companies are used to do empirical test. Analysis results show that tax incentive policy can affect the enterprise capital and labor input, and further have effect on innovation performance. Main research conclusions are as follows:(1) Tax incentives have significant positive effect on capital and labor input of corporate innovation activities. From the perspective of the correlation coefficient, the intensity on labor input is stronger than on capital investment.(2) Capital and labor input of innovation activities has significant positive effect on innovation performance, shows that adequate funding is the key element for implementation of innovation, also the human capital investment is.(3) Innovation input is a complete intermediary variable between tax incentives and innovation performance. After joining innovation input variables, the significant positive correlation between tax policy and innovation performance becomes non-significant, but innovation input still has significant positive effect on innovation performance. This shows tax incentives influencing the enterprise input of innovation activities, so as to affect innovation performance, namely the innovation input variables play full mediation.(4) From the perspective of tax categories, corporate income tax preferential treatment has significant positive effect on capital input and is non-significant with labor input. Turnover tax that represented by value added tax and business tax has significant explanatory ability to enterprise labor input but no significant correlation with capital investment. From the way of tax incentive policy, indirect preferential way has more effective incentive effect on capital and labor investment for carrying out incentive activities compared with direct preferential way. With regard to specific policies, they have different effect on promoting innovation input. Therefore, enterprises need to reasonably select these policies according to the scope of application in order to make full use of the effectiveness.The innovation point is mainly manifested in the following three aspects:(1) Build the conceptual model that tax incentives impact on the enterprise innovation performance through innovation input. Based on the systematic analysis of research literature related to tax incentives, the appropriate conceptual model that tax incentives influence the innovation input and then have effect on innovation performance is established. R&D expenditures variable is seemed as important factor which may affect innovation performance in many previous literatures. Although numerous studies have confirmed the tax policy has incentive effect on R&D expenditures, few literature study the mechanism between preferential tax policy and innovation performance from the visual angles of tax incentive. Therefore, this paper focuses on how tax incentives act on innovation performance through the intermediation of capital and labor input, and to some extent enriches the research on enterprise innovation performance.(2) Test incentive effects of different types of preferential tax policies by using questionnaire survey and public data of listed companies. Many previous literatures adopt questionnaire investigation to research tax policy. The paper firstly uses questionnaire survey data to validate the full mediation of innovation input between tax incentives and innovation performance. On the basis of that research conclusion, we develop further empirical test on different tax categories and preferential way and analyze the different incentive effect of various policies on capital and labor input, which can make the results more credibility.(3) Sort out the development of tax incentive policy in our country as well as the main developed countries. This article comprehensively collects the tax incentive policy about innovation during1978～2012, and categorizes these policies by the annual, tax type of incentives, incentive objects, motivational methods and encouraged link, then divides the development into four stages according to the characteristics of policy in different periods, which is conducive to clear the development of tax incentive policy in our country and the characteristics of different stages. And our country is relatively lack of such studies at present. In addition, as the activities of science and technology change quickly, and enterprises improve innovation ability, some incentives can’t match with the policy objective, so many countries are revising the existing tax incentives. Much more researches about organizing the foreign policies directly refer to the previous literatures, and are quite "time lag". This article obtains the terms of the innovation in tax law directly from the governments website, and sort out the development of tax incentive policy in our country as well as the main developed countries, then put forward some suggestions to improve the innovation incentive effects of the tax policy in our country, according to comparative analysis of the characteristics of the tax incentive policy between our country and developed countries, which are significant for the enterprise combining practice to choose suitable policy ensuring innovation.