Study On The Impact Of Government Subsidies Towards Enterprise Technological Innovation

In order to tackle with the great trauma brought about by the world financial crisis, countries all over the world adopt unprecedented stimulus policy through the ways of seizing the commanding heights of science and technology as important strategies; increasing investment in strategic areas especially in technological innovation; striving to grab the commanding heights in a new round of economic competition. While the world financial crisis brings about havoc to our national economy, it also reveals the major problem of unbalanced national industrial structure. Experience has shown that these problems can be solved by developing strategic emerging industries to achieve the optimization and upgrading transformation of the industrial structure. By taking major technical breakthrough and significant development demand as the base of strategic emerging industries, the technological innovation has been the major driving force to develop strategic emerging industries. However, the high risk of technological innovation and spillover effect may result in the market failure causes the general deficiency existed in the research and development of private enterprises. To rectify such kind of market failure led by insufficient investments in enterprise innovation, governments generally adopt subsidy polices to promote enterprise innovation investment. And government subsidies have become vital means to guide the enterprise technology innovation. Chinese government has issued a series of fiscal and monetary policies to promote enterprise technology innovation, cultivate and develop strategic emerging industries. The fiscal subsidy funds have become the important power of technology innovation of enterprises among strategic emerging industry in China. While the subsidies scale is enlarging, the innovation level and efficiency of strategic emerging industries is still lower, and the problems of excising capacity and redundant construction in some industries emerges in certain areas. Therefore, only by increasing government subsidies would fail to work in promoting the innovation of strategic emerging industries, and the guiding role of government subsidies must be implemented. The theoretical circle concerns much on how to play the role of leverage effectively of government subsidies and guide the enterprise technology innovation activities. Through the combing and induction of the literature, agreements have not been reached on the government subsidies effects. International and domestic scholars focus their studies on the leverage effects of government subsidies towards enterprise innovation from the perspective of corporate governance, enterprise scale, market demands, input type of enterprise research and development, industry characteristics and time lag of policy effects etc. And the theoretical analyzing frame has not been constructed on how the policy of public research and development representing government subsidy promotes enterprise technology innovation. In addition, the different basis of regional resource endowment, financial and market situation, and innovation capability; much regional difference existing on the development of strategic emerging industries; and the different industrial basis and market competition, even the company governance; can affects the leverage of government subsidies on enterprise innovation.For the above reasons, the relationship between government subsidies and enterprise technology innovation based on micro enterprise sample will be studied. First of all, by taking the macroscopical system environment, middle level of market structure and microscopically corporate governance into a universal frame, the theoretical framework will be constructed on how government subsidies promote enterprise technology innovation. And by applying the theoretical framework in how government subsides promote enterprise technology innovation in different regional marketization, industries of different market structures and companies of different ownership concentration, how the theoretical mechanism of the leverage of government subsidies promoting enterprise innovation would function, which contributes to the construction of the framework of how public research and development policy would affect enterprise innovation. Ultimately, it results in the following conclusions:Firstly, the empirical examination of the relationship between government subsidies and enterprise technology innovation reveals if the regional marketization process is higher, the incentive effect of government subsidy towards the enterprise technology innovation input and output will be more significant. In inferior product market competition industries, the promotion effect of government subsidies for enterprise technology innovation input and output is better; in more decentralized enterprises, the investment of government subsidies towards the enterprise technology innovation to will result better. Therefore, much attention should be paid to the pertinence of government subsidies, the differences of institutional environment, market structure and corporate governance. And by using diversified and flexible ways to increase government subsidies, enterprise technology innovation can be guided and promoted. In addition, through the ways of pushing forward the marketalization process of different regions, establishing improved institutional environment, cultivating the leading enterprise and optimizing market structure, improving share structure and enhancing the level of corporate governance, the government subsidies will drastically promote enterprise technology innovation.Secondly, the empirical examination of government subsidies and enterprise technology innovation efficiency also reveals the government subsidies fail to promote the enterprise technology innovation with high efficiency in different marketalization process of different regions, different industries of different product market competition, and enterprises of different ownership. And government subsidies doe not have significant effects on the efficiency of enterprises research and development. Therefore, the improvement of the efficiency of technological innovation among strategic emerging industry enterprises should not just rely on the increase of government subsidies. The corresponding subsidies mechanism should be completed; the selective mechanism for subsidy object should be strengthened; technology assessment and inspection system should be reformed; the information disclosure system of government subsidies should be established and accomplished; the exit mechanism of government subsidies should also be explored and established and the credit mechanism of enterprise technology innovation should be recorded.