Research On The Impacts Of Government’s R&D Funding On The Expenditure Of Enterprise’s R&D

With the intensification of market competition, technological innovation hasbecome an important way for enterprises to enhance their market competitiveness.And R&D activity occupies a pivotal position in the innovative behavior ofenterprises. Because of the existence of "market failure", it requires government’sinnovation funding to stimulate enterprises to increase R&D investment. In Chinathe majority of listed companies are subject to different extent of the government’sR&D funding, but the government tends to direct funding and has too muchintervention in the entrepreneurial activity, which reduces the initiation of the R&Dand makes the effect of government’s R&D funding is not ideal. In recent years, inthe context of the country promoting independent innovation of enterprises, thecorporate’s R&D strength is improved significantly because of the government’sstrong support, the technology innovation pattern also gradually changes for theenterprises invested, and the government’s direct R&D funding formula graduallybecomes to indirect subsidy. Therefore, the study on the impact of the new patternof government’s funding is necessary.Starting from the microscopic point of view, the article analyzes how thegovernment’s R&D funding affects the enterprises’ R&D expenditures according tothe dates of companies listed in Shanghai and Shenzhen stock markets between2002-2009. First, the article theoretically analysis the institutional background ofChinese government’s R&D funding, and introduces the status quo of enterprises’R&D expenditures under various government’s innovative funding policies byselecting Hefei as the research object. Second, on the basis of theoretical analysis,the article constructs an econometric model for the empirical research on theinfluence of different government’s R&D funding on enterprises’ R&Dexpenditures and analyzes the results. Considering the preference of government’sR&D funding, the article makes a empirical comparative analysis on the differentequity nature and sizes of enterprises. Then draw the main conclusions of thisarticle: Indirect funding can promote the enterprises’ R&D spending better thandirect funding; Government’s R&D funding can promote the growth of R&Dexpenditures of non-state-owned enterprises more than state-owned enterprises; Indirect subsidy for the state-owned enterprises, the effect of localgovernment-controlled enterprises is superior to the central government-controlledenterprises; For small and medium enterprises, the direct subsidy effect is betterthan the effect of indirect subsidy. For large enterprises, the effect of indirectsubsidy incentive. Finally, based on the Empirieal analysis，this paper proposescorresponding countermeasures to the behavior and the role of our government inthe innovation activities.