The Influence Of Different Uses Of R&D Funds On Enterprise Innovation

In recent years, with the change of the economic development, market environment and the issue of innovation policy, enterprises pay more and more attention to innovation, which leads to the increasing scale of R&D funds input, from 2005 to 2014, the Chinese enterprise’s R&D spending has increased by 14 times during the 10 years. While the enterprise’s new product sales fell to 12.4% in 2013 from 24.75% in 2000. This suggests that Chinese enterprise innovation is still in a state of "high input, low output". To improve the efficiency of enterprise innovation production, it is very necessary to have a deep analysis about the R&D funds input in detail, which can provides the corresponding policy recommendations.This paper studies the influence of R&D funds on enterprise innovation in terms of different uses of R&D funds, and the regional difference of various R&D funds’ effects on enterprise innovation. On this basis,we can suggest enterprises how to configurate and manage their R&D funds, which is conductive to increase the efficiency of R&D funds and promote innovation.The data of this paper is provincial panel data of China’s large and medium-sized industrial enterprises from 2003 to 2013, the analysis method is stochastic frontier analysis (SFA) which takes Cobb-Douglas production function for the innovation output function, and the econometric model is static fixed effect panel.Through the empirical analysis, we studies the influence of the different uses of R&D funds on enterprise innovation and their output elasticity. First of all, the paper analyzes the influence of four uses R&D funds including the service spending, asset spending, experimental development expenditure and the introduction of technology spending on enterprises innovation, compares their output elasticity, and tries to study the related reasons. Then, this paper studies the influence of enterprise scale, corporate ownership and R&D personnel number on the use of R&D funds. Finally, through dividing the sample data into four subsamples which are eastern region, central region, western region and northeast region, we studies the regional variation in the effect of different R&D funds on enterprise innovation. In addition, in order to verify the results of the empirical analysis whether reasonable and effective or not, this article also do robust test from two aspects which are variable index and econometric model.We found that: firstly, both labor expense and experimental development expenditure in the enterprise R&D spending have a significant role in promoting to the enterprise innovation, while assets spending and the introduction of technology spending have a negative effect on enterprise innovation. Secondly, the output elasticity of services spending is higher than that of the experimental development spending. Thirdly,the number of R&D personnel has a promoting effect to the output elasticity of labor expenditure and experimental development expenditure,while it has a negative effect on the output elasticity of asset spending, and it is not significantly affect the output elasticity of the introduction of technology spending. Enterprise state-owned property right has played a negative role on the output elasticity of all kinds of R&D funds. Enterprise scale promotes the output elasticity of different uses of R&D funds.Fourthly,the effect of different R&D funds on enterprise innovation has significant regional differences.The output elasticity of labor expense and experimental and development spending is higher in eastern region and western region,while the output elasticity of the introduction of technology spending is higher in the central region and northeast region.Fifthly, through the robust test,we finds that the impact of the accumulation of enterprise knowledge on innovation output is not significant.