The Impact Of Government R & D Grants On Enterprise Technological Innovation

Technological innovation is the source of a nation’s competitive advantage. Governments have supported enterprise development to improve the national competitive advantage by means of funding enterprises technological innovation. At present, China has overtaken Japan to become the world’s second largest economy, and its competitiveness of national economy significantly enhanced, which is inextricably linked with technological innovation capabilities. In recent years, the Chinese government attaches great importance to contribution of technological innovation to economic growth, gives a lot of money to support R&D activities of enterprises and actively promote scientific and technological achievements marketization. As an important source of science and technology R&D funding, government R&D funding and its impact on the effect of technological innovation academic problems also caused more and more attention.There are two paths where government R&D funding affects enterprise technological innovation:one is the direct path, where the government grant R&D funding directly to enterprises; the other is an indirect path that knowledge spillovers of government R&D funding for universities and research institutes result in indirect effects on enterprise technology innovation. In this paper, the effect of government direct R&D funding on enterprise technological innovation is combed from two aspects of enterprise technological innovation promoting both investment and product consumption growth, while the impact of indirect funding is analyzed from creating basic innovations and transfusing scientific and technological talents into enterprises. Then the paper constructs a theoretical analysis of current situation, existing problems and constraints of government R&D funding effects based on previous literature and reality of government R&D funding, and it finds that the government R&D funding shortage and limited absorptive capacity of businesses are major constraints. Moreover, the thesis puts government R&D funding into the C-D knowledge production function, testing the government R&D funding effectiveness on technological innovation, and results show that the effect of government R&D funding on technological innovation is remarkable.On this basis, with the help of Hansen’s (1999)"threshold panel regression model", this paper examines the factors that influence government R&D subsidy and exert different impact on enterprise technology innovation. First, this thesis conducts a test on government subsidy’s effectiveness, results show that government funding plays a significant role. On this basis, the paper uses a threshold regression model to further test the threshold characteristics of effect factors such as enterprise scale etc. which influence government funding and to measure threshold level of positive effect, results show that the government funded R&D strength, enterprise scale as well as technology level presents "inverted U" relationship with the effect of government R&D funding, while property types displays U-shape relations with government funding, and business performance shows a relationship of increasing trend. Therefore, as increasing the amounts of subsidies, the government itself should hold proper intensity, fully consider the imbalance in the enterprises development and take different measures due to the funding effect difference in formulating policies and choosing aid objects.